Run or draw.

That was a decision Rick Hill had to make as an undergraduate at the University of Kentucky nearly 40 years ago. A native of Bardstown, he wanted to be an architect but when he signed up for classes and found that mandatory studio times conflicted with running, he picked running.

“I made a career decision right there,” he recalled.

Maybe not so much.

Despite a long career in marketing shopping centers from his base in Charlotte, N.C., and a lifelong interest in running, Hill never lost his urge to design. He just reinvented himself as a real estate strategist and designer.

Recent examples of his mind behind proposed and completed design work in Louisville include the highly touted revitalization by Underhill Associates of Westport Village that h as been called an “against all odds” success. The former grim and decaying Camelot Shopping Center at Westport Rd. and Lyndon Lane won a recent landmark award from the Louisville Historical League. “The main thing was to remove the strip mall look, which was done with creating new traffic patterns and creating a visual axis for the place. It works with small business rather than large ones and it thrives with inexpensive cafés,” Hill said.

Another is an ambitious nearly block-sized make-over for antiques dealer and property owner Joe Ley on East Market St. that could be a major piece of the evolving area. East Market with help from Ley’s anchoring business and a slew of grass roots art galleries, bistros and shops is headed into a new gear with other private owner plans to turn the former campus of Wayside Christian Mission into a downtown farmers’ market and community space.

“What I like about it is that is there’s so much there,” said Hill. “My plan (for Joe Ley properties) is to meet with what is already there and to add to it. This is what I call an in-between area. It needs to be redeveloped from inside out, creating cut-throughs for entire blocks and a sense of meeting places inside the block – a hand-made, home-made locality with all the things that can only be in Louisville, Ky.”

A third project has been the renovation and restoration of Hill’s own new headquarters in the lofty rooms of the former laundry house for the Presbyterian children’s home, Bellwood, in Anchorage.

“A real love is to take an old building and restore it back to its original state,” he said. “I made the commitment to stay true (at Bellwood).” That included copper guttering, a slate roof, new hardwood floors, cleaning the brick. “It was fairly non-economic,” Hill noted.

He is creating his own village, a series of three buildings, including one new one with a quadrangle for public gardens. The group will eventually house his company and other companies. He plans to open a small office in Shanghai and expand staff from three with contract work hired out to a full office with “land planners, an architect with illustration skills, qualified writers, economists and market researchers. “

“I want them to free me up from some of the tedium. . . I want to operate more on the creative side.”

Hill said in his life time he has created plans for 117 real estate developments, created the vision for dozens of projects and directed leasing for more than 10 million square feet.

He helped bring the first IKEA store to the United States in 1985; did the first redevelopment of a regional mall into an off-price center; and created retail planning for Sears Tower in Chicago, so that visitors did more than go up to top and back. The study he produced on how to increase revenue from visitors produced a $2 million stream of income.

He created the sponsor villages, now a park in Atlanta, for the 1996 Olympic Games and led redevelopment planning for the recent redevelopment of Gulfstream Park in Miami from racetrack to up-scale shopping area.

It started with his first “real” job out of college. Hill graduated from UK in 1974 with a degree in general studies, having selected studio art, art history and marketing as his foci.

“The Mall St. Matthews was looking for a marketing advertising specialist. I got the job,” he said. After two years, The Rouse Company that owned The Mall and many other shopping malls, sent him to Tampa, then Philadelphia, then Charlotte, N. C. The Wall Street Journal picked up on his redevelopment of a mall into an off-price center and predicted it was the future. “My phone started ringing off the hook,” Hill recalled. “That was the timing at (age) 29 for me to leave. . . I was young and dumb at that time.”

“I had no money. I began to look for foreclosed shopping centers and would offer to help fix their problems.” In 1990, he took a three week executive program at Stanford University. “I wrote down on a ledger pad all the interesting things I wanted to do. . . I wanted to work in national parks. . . I wanted to work in Africa. . . I wanted to work with the Olympic Games. . . I decided I didn’t want to spend my life taking care of shopping centers and their problems.”

He did strategic planning for national parks, he worked with the Atlanta Olympics, he reclaimed his running and helped start the Nike cross country running series and he made five trips to Ethiopia to work with homeless children and children with AIDS.

“I wanted to change the course of what I was doing,” Hill recalled. “I sold my company headquarters (Hill Partners) in Charlotte, N. C. in early 2001 and had a plan. I was going to semi-retire, spend more time in East Africa and work on this event I had created for Nike. This was to be the rest of my life. Then 9/11 took a lot out of me.”

He got to reading “The City of Collective Memory: Its Historical Imagery and Architectural Entertainments” by urban historian M. Christine Boyer, whose mantra is that the past is prey to invention.

“It’s my Bible” said Hill. “I have to read it a sentence at a time.” But he gets it, said Hill. If the new looks old, it creates a crisis of identity. That is why, he said, “I’m not into new urbanism. I’m into urbanism.”

“I have a love hate relationship with architects. . . I’m anti-city government” in terms of development,” Hill said. He thinks the marketplace is what determines success. As for the proposed controversial sweetheart deal with Cordish Companies for a City Center, he said, “I think it the wrong project in the wrong location at the wrong time. In 10 years, it won’t happen.”

Further, he volunteered, the amount of money being spent on the sports arena at the river front would better be spent $1million at a time in neighborhoods for community design and strategic thinking. “What if you spent $1 million on 30 blocks, or street corners?”

“What makes thing fly,” Hill said, “is when you have a diversity of places and a diversity of people, (when) it’s a 24 hours a day seven days a week action. It’s a living, breathing village. People know each other.”

And that is why his new company formed in 2001 is called Village Solutions.

Today, his projects include creative planning for three projects in India, including a tiger habitat and eco tourism center; a 3,000 acre agriculture village with a hospitality center and a hotel; and a “Bollywood,” a three to four screen cinema complex in Bombay. He is a consultant for the tourist destination of Halong Bay in Vietnam; for an Indo-China gateway to the Himalayas and Tibet for hikers; and the possible development of waterfront sand flats in Redwood Cal.

“I’ve spent a lot of time figuring out where the money is on this globe,” said Hill. “My business is morphing more into what I call marketplace-crafting.” It engages the skills of creative planning and design that drew him to architecture in the first place.

“I try to take projects that stretch me, that teach me, that are fun,” said Hill, “I try to get out those that are not or, not get into them in the first place.”

10 Problems with Dubai

1. Birds of a Feather. Many of the development companies in Dubai were managed by self-serving groups who were good at covering everyone’s back. As an example, some firms consisted primarily of Australians, and another all British. Their reaction to outside of the family managers was “it’s our tea party and you are not going to crash it.” In this regard, one would get a sense that the players knew they were building a house of cards and wanted to get as much as they could until the party was over.

2. How many times could you slice the same pie? Too many related development companies chased the same market with the same product.

3. Lack of Experience. There were not enough managers on the ground that had significant experience with multi-tenant retail development and even fewer with mixed-use property management experience. In their place were former academics, PHDs, engineers, graduates of the London School of Economics and more. But what was missing was conviction in knowing how to get things done.

4. Flawed Research. Market research was viewed as icing on the cake and not a reality check. People who did the research were well educated but had spent little time in doing real research on the performance of actual operating properties.

5. Wrong starting point. Market researchers bought the notion of 35,000,000 annual visitors to Dubai by 2012 and most projections flowed from that initial flawed estimation.

6. Lack of real people. Many new developments failed because the required density of buyers, tenants, shoppers and guest could not be generated fast enough to support the enormous infrastructure costs of highways, bridges, monorail system, airports, water and sewer and more.

7. Alice sighed wearily. `I think you might do something better with the time,’ she said, `than waste it in asking riddles that have no answers.’ Timetables for new developments and justification for projects were unrealistic and when questioned about the underlying reasoning I would often be told, “Everything is possible in Dubai”.

8. Lack of Transparency. Information and communication regarding all aspects of a project were often hidden within their own development teams. There was little transparency in top to bottom directives. In brief, there were too many levels of management and when asked the hard questions one would often be told a lie and the other would swear to it. In this example, almost every project in Dubai was going to be bigger, grander, and more creative than the next. A decision maker would communicate a vision of the world’s tallest building, the world’s largest mall, and so on. An architect would then translate the vision into wonderful computer generated images of the vision which would become the plan. Yet, there was limited central planning that was charged to connect all of the individual projects. As a result simple issues of capacity, parking, sidewalks, crosswalks, and more were thrown to the side.

9. Multi-brand tenants. Through licensing agreements, joint ventures, partnerships and franchises, single entities operated numerous storefronts with different brands. In some cases the full product line and the brand experience was appropriately transferred to a Dubai mall, but more often than not, one could see significant differences between company owned and operated shops as opposed to the Dubai presentations. As an example, Kitson in Wafi Mall just does not compare to the full experience on Robertson Street in LA.

10. Master Plans. Most projects in Dubai were driven with a vision communicated by excellent illustrations, models, and elaborate brochures but there was limited master planning of the entire city/state. As a result, the edges of projects, the zones between projects, and connection with adjacent properties were just short of horrible.

Now that I have vented, there is a lot of hope for Dubai. Hope that the vision is filtered and modified to allow it to grow at a sustainable rate. There is a hope that thecity/state regains its momentum and that new leadership finds its way to the top of the best development firms.

Then in 2008, along came Aventura Mall, located a few miles north of Bal Harbour with a report that their sales were exceeding $1100 per square foot and they were closing in on Bal Harbour.  But not to be out done, Bal Harbour came back with astounding sales projections that jumped to $2,139 per square foot in 2008.  In nearby Orlando, upstart Mall at Millenia reported sales per square foot at a surprising $1000.

So what’s up with these sales when the more mortal mall produces sales of $350 per square foot?

The answers are as follows:

• A new Apple store can raise the average sales of a good shopping center, dramatically.  Take for example their 10,000 square foot Fifth Avenue store in New York where gross sales were in the $350,000,000 range last year.  That equates to sales of $35,000 per square foot.  Add those types of sales to a specialty store mix and you can quickly see what happens to overall mall sales.  This is not to suggest that all Apple stores approach anything like their Fifth Avenue location but the more mortal mall can realize big overall gains in sales per square foot with the addition of an Apple store.  Smart real estate people are no longer accepting blind projections on average sales.  They now ask for a center’s average sales without Apple.
• In Bal Harbour very high end jewelers like Graff have been added to the mix in the past couple of years with the likes of Harry Winston, Cartier and Van Cleef & Arpels.  But with store sizes of 1,000 square feet or less and an inventory with average price points in the tens of thousands it is not uncommon to see the addition of one store make a big difference in overall sales.
• Many malls exclude their underperforming shops when they report sales to the media.
• Malls with traditional lower producing uses such as a cinema will often be excluded from sales performance calculation.
• Smart developers constantly prune their tenant mix by terminating the leases of underperforming shops and replacing them with stores that will perform at a level higher than the center average.
• The highest producing malls realize a high percentage of their sales from international visitors.  As example, Aventura Mall generates 40% of its sales from visitors and Bal Harbour 50%.
• The devalued dollar has helped propel the sales of many malls that attract international shoppers.

Part of Louis Vuitton's Mongolia Ad Campaign

The economic crisis has hit the luxury goods market hard. Houses such as Versace closed stores in Japan and Louis Vuitton shelved its Ginza, Tokyo opening. Moscow also saw brands such as Stella McCartney, Alexander McQueen, and Lanvin close. With spending on luxury goods down across the world, luxury brands are increasingly looking far beyond New York, London or Paris for revenue to less familiar locales such as Almaty, Kazakhstan; Shenzhen in China’s Guangdong province and Ulaanbaatar, Mongolia. These countries are generating revenues from energy and manufacturing, and thus have small communities of people with extreme wealth. Therefore, these luxury brands are targeting these pockets of wealth.

Louis Vuitton followed this trend by opening its store in Ulaanbaatar, the capital of Mongolia, on October 23. Mongolia is an Asian country of 2.7 million people with extensive mineral resources but has only an average per capita annual income of just over $1,800 USD. Ulaanbaatar had a 2008 population of just over 1 million. Most of its young residents are the first generation of their family to be born or grow up in the city.

Yves Carcelle, chairman of Louis Vuitton, illuminated their decision to open in Ulaanbaatar by stating “The desire for luxury is more and more universal so the luxury sector has to reach its clients around the world”.

So why target these new markets? As the economic recession worsens for the commercial real estate sector, especially in the west, luxury brands have to find new ways to survive and thrive – either through targeting new markets or adding new concepts. It appears they have chosen to target new markets.

A recent study by Bain & Co showed luxury sales this year will drop by 16% in North America, 10% in Japan and 8% in Europe compared to last year. In the rest of Asia however, sales are set to grow by 10%. Of the 300 luxury store openings in 2009, 15% will be in China, 25% in other Asian countries, 30% in the Middle East, and 15% in Eastern Europe and the Middle East. In contrast, just 15% will be in Western markets. However what the study does not show is that many of these opening are a result of several years of negotiations and leases with large termination fees. The true indicator of the luxury industry health will come in the next few years as the commercial real estate industry continues to deal with the economic recession ramifications.

Besides the major cosmopolitan cities, most of Asia has been untapped by luxury markets; partly due to accessibility and development. Much of Central Asia was isolated from these western luxury brands until the early 1990’s when Communism fell.

The digital revolution has also enabled luxury brands to enter the lives of new markets and consumers. In essence, the internet and media with it global reach has “increased demand by acting as a catalyst for markets” explained Bruno Pavlovsky of Chanel.

While it seems odd that luxury and European stores would be well adapted to Mongolians and their lifestyle, Mongolians have a long history of embracing other cultures. For instance, the Mongol army not only conquered the better part of the known world at the time, but they also embraced and developed the cultures they came across. Under the Mongols, new technologies, various commodities and ideologies were disseminated and exchanged across Eurasia.

Already Mongolia has an impressive number of international brands with Adidas, Mercedes Benz, Dior, Esprit, Swarovski, BMW, Land Rover, Lavazzia and many more. A Hilton and a Shangri La hotels are scheduled to open in the next few years. Additionally, Salvatore Ferragamo is also looking into opening a branch in Mongolia.

2010 will see the opening of other luxury brand stores, including Hugo Boss, Ermenegildo Zegna, Emporio Armani, Burberry and Versace. Gucci has already started advertising its new scent on TV, so perhaps a Gucci store is in the works.

While these brands have very different target consumers in their more developed markets, in Mongolia they may have to compete for the same handful of customers who can afford their products and are brand-conscious enough to purchase them.

Apparently, there seems to be sufficient number of high-net-worth Mongolian individuals for the luxury brands. Likewise, the LV store is another additional vote of confidence in the dynamic growth of Mongolia that some predicted could become the next Qatar. The internet is already filled with companies offering luxury vacations to Mongolia.

I believe Legoland sees an opportunity in the recession because consumers are looking for free or affordable cost entertainment in their malls. This trend also corresponds to a consumer who expects their news to be free on the web. Consequently, we see malls across the globe add entertainment and amusement venues to draw consumers who have relegated shopping to obligatory time, which is something close to work. These consumers are bored with the same stores in every mall and with higher gas prices, lost home values and depressed 401K accounts they do not have the funds for a shopping spree.

Yet, Legoland charges on with a strategy to open in Grapevine Mills mall in Dallas, TX and are they are looking for a location near the Georgia Aquarium in Atlanta. Additionally, the city of Dallas will give Merlin Entertainment, the operator of Legoland, a $1 million TIF (Tax Incremental Financing) incentive package to open in the mall. The facility is projected to open in March 2011 in 40,000 square feet.

Glenn Earlam, a managing director with Merlin, said in a statement that “the inclusion of a quality leisure attraction like the Legoland Discovery Centre will . . . deliver significant incremental business to both the mall, to the Dallas-Fort Worth Metroplex and the greater region as a whole.”

Likewise, Disney earlier this month announced that they are turning 340 of their Disney Stores into “entertainment hubs” and renaming them Imagination Park with the help of Apple’s Steve Jobs. The goal is to make children clamor to visit the stores and stay longer, perhaps bolstering sales as a result. Over the next five years, analysts estimate that Disney will spend about $1 million a store to redecorate, reorganize and install interactive technology. Some Disney board members fretted though that the concept was so lavish that parents would try to use the stores as day care centers. Others worried that people would come for the entertainment but not buy anything. Disney is pitting landlords against each other to try and get the best deals in top-tier locations.

The Middle East seems to be leading the trend with the biggest entertainment venues as attractions in malls. Examples include the 15,000 square foot Wahooo! Waterpark which just opened in Bahrain City Centre mall, and the now infamous Ski Dubai at the Mall of Emirates.

Ski Dubai located in Mall of EmiratesBut will these large financial investments hold up in the long-run? Or are they a 21st Century repeat of the previously failed versions of entertainment in malls, such as Warner Brothers, Gameworks, FAO Schwarz and Niketown? The 1990s saw the end of roller rinks in malls and affordable home video game systems killed the mall arcade.

With all the focus on entertainment will the new shops fail like many others in the past, especially when Target and Wal-Mart offer the lowest priced toys in a warehouse envirnoment?

Disney claims sales at its original stores, which opened in 1987 and sold to Children’s Place in 2004, plummeted because they oversaturated the market. However, many analysts believe that the stores’ visitation was high due to the entertainment but not enough people bought to sustain the rents and overhead.

I remember stopping in The Disney Store on every mall visit but only purchasing merchandise a handful of times. Is my experience the norm or a rarity?

Additionally, FAO Schwartz which was a New York destination failed when it tried to bring their concept to malls proving that high entertainment value does not always translate into high sales figures. So I ask the question, are these high investment entertainment venues going to last or are they a trend that will be a lecture in business school ten years from now?

However, in recent years the American culinary marketplace experienced a momentous change in the way people eat, cook and dine. As such, five primary factors have changed food and the way we consume and experience it.

First, cooking responsibilities are being shared between husband and wife as equality in the home becomes more balanced. But men brought their own sensibilities into the kitchen and to the backyard grille as well as a right to request, “Let’s eat out tonight”.

Second, the public has become highly educated about food and cooking. Everything from the Food Channel to reality TV shows, and from large cook book sections in the mega bookstores to cheap tickets to international destinations have all contributed to the creation of the informed and experimental home chef.

Consequently, ethnic restaurants and specialty food markets have grown rapidly in order to respond to a consumer base that wants more herbs, more spices, more ethnic foods and more varied produce. A subset to the grocery has been the growth of the green market, farmers markets and artisan food shops as found in San Francisco’s Ferry Terminal and New York’s Chelsea Market.

Likewise the well traveled consumer has sampled regional cooking styles from Nairobi to Miami. As they have dined out around the world they have brought back a fusion of tastes. Consequently, a new generation of themed restaurants, with an emphasis on basic fare, has evolved. Examples include national chains like Margarittaville, Cheesecake Factory, and P.F. Chang’s on the lower end of the spectrum and regional one-off establishments such as Spice Market and Buddha Kahn.

Third, the celebrity chef-restaurateur became in vogue. Names like Alice Waters, Alain Ducasse, Daniel Bouland, Thomas Keller and Joel Rubuchon became media celebrities and household names. These operator/chefs were quick to capitalize on their notoriety and opened new outposts in Las Vegas, New York, Paris, Los Angeles and London.

Fourth, a supermarket revolution has taken place over the past decade, with Whole Foods and Wegman’s leading the way. In response, traditional grocery stores like Publix and Kroger added new departments with fresh flowers, sushi stands, and more exotic produce and citrus offerings. With the availability of good ingredients, the consumer turned into their own version of the world traveled gourmet chef.

Fifth, and finally in the wake of the current recession, consumers have now returned to in-home dining with comfort food and the use of traditional brands. When they do dine out, they are often trading down to fast food over casual sit down restaurants.

However, a recent headline in USA Today proclaimed that consumer spending had grown to 71% of the GDP in the second quarter of 2009. On the surface this could be viewed as another positive sign of an improving economy, but in reality it is not. The real fact is that consumption as a percentage of the economy typically increases during a recession because output in manufacturing, construction, and business expenditures almost always drop first and at a higher percentage than consumer purchases. The result is a smaller basket of economic variables with the consumer taking a higher percentage of the whole.

Taking into account the government’s various stimulus packages that provided credits for first time home buyers, reduced taxes for many, and provided credits for clunkers; it is not surprising that consumer expenditures represented 71% of the GDP. However when you compare the actual dollar amount to last year’s figures, the 71% looks bleaker. For instance, now that credit is tight, wages are stagnant, and unemployment is still growing, consumer expenditures actually dropped 1.9% in the second quarter of 2009 representing a staggering $195 billion loss over the same period in 2008.
Conversely, consumption’s share of the economy has historically been more around the 65% level and it did not exceed 70% until last year. As a comparison, China’s GDP has a consumption rate of 35% down from 49% in 1990 largely because the country exports more than it consumes and the average citizen saves and saves – something Americans are trying to do. The implication is not good for retail over the next year or two, and it may suggest a seismic consumer shift in our economy.

JUST THE FACTS
1. The apparel industry is a $191 billion industry.
2. Back to school sales in the U.S. were expected to reach $38.3 billion, up .06% from 2008.
3. A recent study found that in locations with a strong independent retail culture, 45% of every dollar spent at an independent bookstore remained in the local market.
4. In the first half of 2009, the sale of luxury goods dropped 15%-20% over 2009.
5. American families account for 40% of all borrowing in the U.S.
6. Between 2003 and 2004 handbag sales grew by 26%.
7. Handbag sales reached a peak in 2007 of $9 billion, up 100% over 2001.

Go Figure
1. Emanuel Ungaro recently announced that it hired Lindsay Lohan as its artistic advisor.
2. Vera Wang dropped prices for next spring’s resort collection and was told by many department store buyers that her price of $600-$800 for dresses maybe too low for a designer department.
3. Designers are wondering why their clothes are being seen as exotically pricey after doing quick-and-dirty lines for fast fashion retailers.
4. Consumers now expect merchandise more frequently with the rise of Zara, H & M, and Forever 21. Yet, designers are trying to reduce the number of lines they create each year (fall, holiday, resort, spring, and summer).
5. In the last quarter ending September 30, 2009, Neiman Marcus sales were down 23% from the previous year.
6. In 2006 and 2007, Chanel introduced clear “naked” handbags. The next year in 2008 total handbag sales dropped $1.1 billion.
7. Luxury consumers are still buying at the high end, which has become somewhat relative, but entry level shoppers are looking for items at lower prices.
8. Gourmet tea is now selling for up to $1000 a pound and sells for 30% more than standard teas in restaurants. The French are the leading connoisseurs and they are bringing as much discernment to tea drinking as wine. The leading purveyors of tea include TWG Tea based in Singapore, and Le Palais des Thes and Dammann Freres in Pairs.

Rise of the Frugal Consumer
1. Consumers have adopted a prolonged frugality, especially in the purchase of luxury goods.
2. Higher income individuals are restricting purchases to items that have a more practical purpose and forgoing items that are trendy and may go out of style in one season.
3. The consumer is moving toward individuality and away from fashion commands on cue such as hem length.
4. Consumers are spending more time at home eating and not as much time eating out.
5. Home improvement shoppers have turned to purchasing repair and maintenance items, instead of buying discretionary goods.
6. Consumers still value high quality, convenience, and healthfulness.
7. The back-to-basics shift in consumer sentiment will likely remain permanent, even after the recession.
8. Consumer behavior as a result of this recession has been modified for an entire generation.
9. While traditional toys sales have declined as a result of competition with video games, iPods, and the internet, Lego’s sales jumped 32% in 2008 and double digit sales gain continue in 2009.
10. Consumers have cut back on all forms of travel: gas, new auto and airplane tickets. Yet, consumer expenditure on all forms of entertainment is up in 2008 and 2009 over 2007.
11. Unemployment, salary freezes, and salary and benefit cutbacks will remain a significant drag on consumer expenditures for some time.

Share and Enjoy:

]]> http://villagesolutionscompany.com/blog/recap/feed/ 0 http://villagesolutionscompany.com/blog/pedestrian-thoughts-3/ http://villagesolutionscompany.com/blog/pedestrian-thoughts-3/#comments Fri, 09 Oct 2009 19:28:11 +0000 Rick Hill http://villagesolutionscompany.com/blog/?p=179 Lego
Lego has opened its first concept store in Concord Mills, located north of Charlotte, NC. The 4,520 square foot store has been designed to create an interaction between children with on-site master builders. The store has room for birthday parties and classes.

Versace
Recently announced it was closing all thirty (30) of its stores in Japan.

New World
A new world is likely to emerge in which designers rebel against long lead times and where they take their collections directly to the consumer through their own boutiques, trunk shows, and over the web.

Web Sales
Web sales are projected to reach $156 billion in 2009, representing 6% of the total U.S. retail pie

The Web Fashion Consumer
Consumers have come to expect new merchandise more frequently, thanks to the web and fast fashion retailers such as H & M. Many cannot understand why they have to wait 6 months to see the fashions seen on the runways. Buyers at department stores generally base their orders on the past, while fashion editors gravitate to the most photogenic and future looking styles, leaving the consumer stuck in the middle. This results in one facet of the fashion industry looking forward and the other looking backwards. The consequence: a consumer on one hand is told what to buy but on the other, not where to buy it.

In response, a new generation of fashion retailers is emerging on the web where news is freely given and fashion is sold. Net-a-porter with average sales of $820.00 per transaction and customers from 170 countries is one example of this new generation of merchants. The company has successfully merged its web retail site with a fashion news site catering to a new consumer who wants credible news over magazine advertisements and the most up to date fashion now.


Entertainment
Families spent 5.1% more on entertainment in 2008 than in 2009, something that has surprised many economists. As consumers tightened their pocket books and wallets one would expect entertainment to be one of the first categories to see significant decreases. But the 5.1% increase in spending equated to 16.5 billion more dollars spent in the category over 2007.

Household debt
The American family is trying to put money into savings and reduce their overall debt, but they are clearly not faring as well as one might expect in this recession. Household debt now amounts to about 125% of after tax income.

High Net Worth Individuals
Luxury retailers are faced with a significant decline in Americans with a high net worth defined as having $1,000,000 of assets available for investment. In 2008 the assets of these individuals dropped by as much as 22%. The result is a major decrease in sales at retailers such as Neiman Marcus where sales have decreased by over 20% in 2009 over 2008.

Share and Enjoy:

]]> http://villagesolutionscompany.com/blog/pedestrian-thoughts-3/feed/ 0 http://villagesolutionscompany.com/blog/ask-how-not-why/ http://villagesolutionscompany.com/blog/ask-how-not-why/#comments Fri, 09 Oct 2009 19:03:52 +0000 Devon Hill http://villagesolutionscompany.com/blog/?p=172 One of the first lessons I remember from my undergraduate anthropology studies is “ask how not why/what”. Many market research studies examine who buys what fashion and what are the fashion trends, but it fails to understand the underlining why. By asking how, you implicitly are requesting a story and not a simple answer. “Why” can often put individuals on the defensive leading to short abrupt answers, and does not actually reveal the why or motivation behind a decision. Understanding why and how these trends occur enable us to build strong brand loyalty and partake in better predictive analysis.One of the first lessons I remember from my undergraduate anthropology studies is “ask how not why/what”. Many market research studies examine who buys what fashion and what are the fashion trends, but it fails to understand the underlining why. By asking how, you implicitly are requesting a story and not a simple answer. “Why” can often put individuals on the defensive leading to short abrupt answers, and does not actually reveal the why or motivation behind a decision. Understanding why and how these trends occur enable us to build strong brand loyalty and partake in better predictive analysis.

I think we all have memories of a parent scolding us and stating “why did you do get a D”. As independence seeking teenagers, our responses were generally defensive and short “I studied!” Imagine if our parents had changed a few words and asked “how did this happen”. Perhaps we would have retold the events causing us to not fully understand the material while simultaneously fostering more understanding between ourselves and our parents.



By simply asking what consumers like and why, we are only receiving a small glimpse of the story and possible creating a disconnect, just as our parents only saw one side of the situation. Projects and clients often require us to gather vast amount of information in a short time frame, making the collection of grocery sales based on household income and ZIP code necessary, but far too often we stop there instead of using this knowledge to dig deeper. While this information provides a great deal of information and a starting point it merely tells us what consumers are buying, not why. Discovering the how and why allows us to truly know our customers.

By asking why or what framed questions, people tend to give answers they believe the questioner/interviewer wants. Therefore, we tend to receive answers that sound logical and are even what we expected. This is why polls and surveys have too many variables. With the social media world providing a quick turn about on a large sample size, the holes in polls and surveys are being illuminated as questioners are finding that the time of day the survey is offered drastically changes the results.

So how does market research evolve? As an anthropologist, I am biased towards the anthropological method and therefore suggest we take a lesson from Claude Levi-Strauss and move beyond studying the mere content provided by polls, surveys and classic quantitative demographics to analyzing the structure – or connections accomplished through examining the sub-cultures of our consumers and engaging with them on a deeper level. With the economic meltdown, I believe we are seeing a drastic shift in consumer spending. Brands have to compete more for their consumers. Investing in more in-depth ethnographic research will enable them to build a stronger bond with their customers. For instance, in the wake of many luxury retailers closing shop in Japan I ask is Japan loosing prestige as a luxury retail destination or are the retailers not connecting with a changing mindset of its Japanese clientele. I argue that these luxury retailers are becoming too elusive and exclusive and the up and coming generation connects more and has more loyalty to brands they can relate to through events such as Tokyo Girls Collection.



A model waves to a fan during the Tokyo Girls Collection fashion show

Share and Enjoy:

]]> http://villagesolutionscompany.com/blog/ask-how-not-why/feed/ 0