Consumer Research and Its Role in Shopping Cetner Development

Peter A. Doherty, Impact Resources, Inc.
[ to cite ]:
Peter A. Doherty (1991) ,"Consumer Research and Its Role in Shopping Cetner Development", in NA - Advances in Consumer Research Volume 18, eds. Rebecca H. Holman and Michael R. Solomon, Provo, UT : Association for Consumer Research, Pages: 453-461.

Advances in Consumer Research Volume 18, 1991      Pages 453-461

CONSUMER RESEARCH AND ITS ROLE IN SHOPPING CETNER DEVELOPMENT

Peter A. Doherty, Impact Resources, Inc.

Shopping center development in the 1990s will require increased reliance upon well-selected consumer information. Markets are becoming saturated with gross leasable area and market shifts are placing pressure upon the redevelopment and repositioning of existing centers.

Local market syndicated consumer information can provide important input to guide the development and redevelopment of America's shopping center industry. This paper explores the application of a syndicated local market consumer survey which can dramatically decrease the amount of expensive, customized research required. This survey is called MA*RT, which is an acronym for Market Audience ! Readership Traffic. MA*RT, with its retail focus, can be used in all levels of shopping center development, including:

Understanding the target consumer

Developing the product/service mix

Developing center image/design/signage

Lease planning

MA*RT SYNDICATED CONSUMER RESEARCH

MA*RT measures local markets, collecting at either the Consolidated Metropolitan Statistical Area (CMSA) or the Metropolitan Statistical Area (MSA) levels. MA*RT currently measures 49 local markets annually that account for over 80 MSAs and 50 percent of the United States population. Within each of the MA*RT-measured markets, 5,000 to 18,000 surveys are collected, the exact number varies by the size and complexity of the market.

The destination-oriented collection scheme is designed to sample in areas of general retail consumer traffic flow. There arc typically between 20 and 100 collection sites per market, including:

Super-regional and regional malls

Community and neighborhood shopping centers

Other areas of high retail traffic (e.g. downtown shopping districts and grocery and other destination stores).

ACCURATE REPRESENTATION OF THE CONSUMER MARKETPLACE

Tight controls are set during the collection process to assure an accurate representation of the consumer marketplace. Controls consist of census-based information relating to:

Age

Sex

Income

Ethnicity

Geography

These characteristics have been found to exhibit a close correlation with a wide cross-section of consumer behaviors and therefore function as important drivers or independent controls for these behaviors. The network of collection sites are set up across the market and a target number of surveys assigned per site with these controls in mind.

ACTIONABLE INFORMATION FOR SHOPPING CENTER DEVELOPMENT

The MA*RT consumer survey collects over 450 actionable pieces of consumer information, most of which can be useful in the development or redevelopment of shopping centers.

Demographic Information

MA*RT collects over twenty pieces of basic demographic information from each consumer respondent. These accumulated characteristics give an overall profile of a market's consumer population or of specific consumer groups (e.g. cellular telephone owners or Saks Fifth Avenue shoppers).

Lifestyle Characteristics

Consumers lifestyle characteristics, especially leisure time activities, can be helpful in store design, signage, advertising and merchandising. Is the target consumer interested in sports, fitness, outdoor activities, or theater?

Retail Behavior

MA*RT collects consumers store preferences and reasons for shopping the store for sixteen merchandise categories. Consumers store preferences are useful not only for developing specific store shopper profiles, but also in developing leasing plans. MA*RT has information on over 1,500 retailers nationwide. Over 450 data points are available for every retailer in the MA*RT database, so a thorough understanding of each retailer's customer is at hand.

Consumers shopping motivations and fashion orientation are useful in developing a focus or image for a shopping center. Should the center focus around low price, or do the consumers mandate a quality/service/fashion-oriented center?

Purchase Intentions

MA*RT's major purchase intentions shed light on current opportunities. The MA*RT survey asks definite, probable, and undecided intentions to purchase each of twelve categories within the year.

Cross Media Measurement

The relative importance of different forms of media for each specific consumer group can be seen through MA*RT, taking the guesswork out of developing a media strategy. What times of the day do my shoppers tune in to which radio stations? Do my shoppers really read the lifestyle section of the paper? How much time does my target customer spend watching TV? Are my newspaper ad inserts effective?

MAJOR ISSUES FACING SHOPPING CENTER DEVELOPMENT

To state the obvious, shopping center development or redevelopment is a task of great complexity. However, there are a number of critical elements that can be identified for which MA*RT consumer information can provide vital decision-making insights. These include:

Local market differences

Micro-marketing demands

Tenant mix criteria

Research needs for the 1990s

Major Issue No. 1: Local Market Differences

Consumers are not the same across all markets. A shopping center concept developed for New York may not work in Kansas City. MA RT's database of-local market information allows one to quickly understand a city's unique qualities, understand its strengths and weaknesses, and understand its competitors, other markets, strengths and weaknesses. In other words, MA*RT can help us profile a market and establish its competitive position .

Many cities have a well-established image, such as New York, for being sophisticated and fashion forward. New York City, Boston and Los Angeles are the top ranked critics for fine dining. (Figure 1). Detroit is not far behind. When looking at the percentage of consumers that attend live theater, Washington D.C., Los Angeles and Detroit are the top ranked. New York follows directly behind. And if our focus was on people who like to go to sporting events, then Minneapolis is the clear winner. But Cincinnati and Kansas City are up there too.

Concentrations of specific target customer groups vary radically by market (e.g. Hispanics, Blacks, Asians, or seniors). A large sample syndicated survey can provide detailed information on once undervalued segments. (Figure 2). If it is large enough, it can also go beyond just size and examine details. Is there a market for fashion forward women aged 65 and older? West Palm Beach and Miami have strong presence of fashion forward seniors, in stark contrast to Phoenix and Tampa.

For those developments or retailers that focus on service as an important differential advantage, knowing service-oriented markets is a major leg up. These markets have the customers who demand service and the retailers who have cultivated this market demand. In other words, the markets are prepared.

The top five markets for service as a reason for department store choice are shown in Figure 3. The impact of Nordstrom is evident, being present in all these markets.

Looked at by merchandise line, the top five markets vary. When considering service as a reason for selecting a men's casual clothing store, the influence of Nordstrom is again apparent. Nordstrom is presently in three of the top five ranked markets - Seattle, San Diego and Salt Lake City.

If you are developing a price-first center concept, markets where consumers focus on price should be high on your list. Cincinnati, San Antonio and Phoenix top the list of MA*RT-measured markets for concentration on price as a reason for selecting a women's casual clothing store. For TV/VCR, Cincinnati, Sacramento and Minneapolis are the top three price-oriented markets.

Major Issue No. 2: Micro-marketing Demands

Shopping centers in the 1990s face the same problems that faced the traditional department store in the 1970s and 1980s. They can no longer be all things to all people. Increased competition in saturated markets, together with a more individualistic and demanding consumer, have led to an age of target marketing, niche marketing and micro-marketing.

The traditional department store has had to compete with discount stores, specialty stores, mass merchandise stores, hypermarkets, off-price stores, membership warehouse clubs, and direct mail/catalog retailers. In a similar manner the (now) traditional regional mall competes with fashion malls, power centers, home center malls, off-price malls, factory outlet centers, and many more. Each center is attempting to develop a niche based upon a specific segment of the consumer population. Successful centers are able to identify a clear target consumer group, put in place a mixture of stores with the right product at the right price, quality and service level to meet their demands and do so by creating an ego pleasing shopping environment.

Micro-marketing, niche marketing and target marketing are the buzz-words of retailing today. One example of a consumer niche is fashion orientation. The MA*RT survey asks respondents to identify with one of three fashion focuses: newest trends and styles, conservative or traditional fashion, or value and comfort instead of fashion. (Figure 4).

The typical target for a department store, the 25-54 year old, is well-represented in all components. If you go after one fashion component you miss over half the group, but you can't be all things to all people. Highly targeted specialty stores have responded to this:

Fashion forward -- The Limited

Conservative -- Talbots

Value and comfort Eddie Bauer

In contrast to those shopping centers serving relatively homogeneous populations, downtown retail often must cater to several different constituent groups, including downtown workers, residents, shoppers, and visitors. Downtown mall developers must recognize these consumer differences. Who will be the core customer? The fringe customer?

FIGURE 1

FINE DINING IS ON THE MENU ACROSS AMERICA'S LARGEST CITIES

FIGURE 2

PERCENT OF MARKET POPULATION AGED 65+

In Cleveland, important constituents are the downtown workers and downtown residents. (Figure 5). As the shopping is improved the affluent will become part of the core shopper group. As we can see there are clearly different segments with different needs and capabilities. The proportion aged 25-54 is relatively similar, but there are dramatic differences in income and education.

With a major focus of retailing on service, service quality may well be the competitive position of a mall and its tenants. What does a service-oriented consumer look like? Other centers may focus on price-oriented consumers. What does a price-oriented customer look like?

Using Los Angles consumers as an example, we examine service-oriented consumers, and to make their attributes pop out, we have contrasted them with price-oriented consumers. (Figure 6).

Compared to price-oriented consumers, service-oriented consumers are more likely to be married, highly educated, hold white collar jobs, and be slightly more concentrated in the 2544 year old age group. When it comes to income, service-oriented consumers are strongly concentrated in the upper income groups, over half have household incomes of $50,000 or above. Service-oriented consumers have a somewhat lower proportion of dual income households than their price-oriented counterparts.

FIGURE 3

SERVICE AS A REASON FOR DEPARTMENT STORE CHOICE

FIGURE 4

FASHION CONSCIOUSNESS AMONG AGE GROUPS

Service-oriented Los Angeles consumers are very fashion forward, over twice as likely to favor the newest trends and styles than their price-oriented neighbors. A slightly smaller percentage allies with conservative and traditional fashions, while only a very small percentage are not fashion conscious. It therefore comes as no surprise that service-oriented consumers are four times as likely to prefer specialty department stores as price-oriented consumers. And price-oriented consumers are eight times as likely to prefer discount stores.

MaJor Issue No. 3: Tenant Mix Criteria

The development of a shopping center tenant mix has many determinants, including:

The image of the center and the city

The competitive position

The target constituencies

The merchandise mix

FIGURE 5

DOWNTOWN WORKERS/DOWNTOWN RESIDENTS/AFFLUENTS

SELECT DEMOGRAPHICS

CLEVELAND

FIGURE 6

SERVICE VS. PRICE ORIENTED CONSUMERS

SELECT DEMOGRAPHICS

LOS ANGELES

FIGURE 7

WOMEN'S SPECIALTY APPAREL

REGIONAL SELECTION LEADERS

The MA*RT database, rich in retail information and with profiles of over 1,500 retailers, can be an invaluable tool for developing a tenant mix. Impact Resources has analyzed consumers retail preferences and their motivations for shopping specific stores. In our version of the People's Choice Awards, retail leaders in each merchandise line for every shopping motivation are identified by census region. Retail winners are those retailers whose regular customers identified a given motivation more often than regular customers at other stores in the same merchandise line. These retail winners are published annually in the Consumer Viewpoint Study, a joint publication with the Retail Advertising and Marketing Association.

Women's specialty apparel selection leaders are identified (Figure 7).

Merry-Go-Round leads in the Northeast (82.4% of women in the Northeast who shop at Merry-Go-Round for women's clothing choose this store because of selection).

The Gap and Brooks Fashions tie as leaders in the Midwest

Deb Shops in the South

Lane Bryant in the West

Casual Corner has succeeded in impressing its customers with quality merchandise across the country, with the exception of the Midwest where The Gap wins out. The Limited receives second place in all four regions. Casual Comer and the Limited have low ratings on price and high ratings on quality. The Gap has developed strengths in both quality and selection.

Casual Corner also succeeds in offering high service levels consistently across the country. The advertising message, "Build Your Wardrobe at Casual Corner," and a complete line of merchandise offered in addition to Casual Corner's "investment dressing" and "private consultation" programs have helped this service image.

Yet Casual Corner's direct competition, The Limited, wins the market share game hands down. How does the Casual Corner shopper differ from The Limited? While they both target the younger female and student shopper, The Limited niches much more strongly. (Figure 8). The same is true for fashion. Both stores appeal to the fashion-forward shopper, but The Limited is much more dramatic. Casual Corner also appeals strongly to the more conservative traditional shopper and has made strong inroads into the black consumer marketplace.

If you are looking for a service-oriented anchor, department store service winners may be of interest. (Figure 9). As you would expect, Nordstrom's legendary service makes it a dominant force in every market in which it competes. As this company expands into the Northeast, its reputation precedes it. Look out B. Forman and then look out Jacobsons!

FIGURE 8

CASUAL CORNER VS. LIMITED SHPRS

MIDWEST PROFILE

FIGURE 9

DEPARTMENT STORES

REGIONAL SERVICE LEADERS

FIGURE 10

FASHION MALL OF AMERICA

We cannot tenant a mall without important inputs on the market, target customer, competitive position, and center image. However, as an illustration of the use of a large local market syndicated survey, we can construct certain ideal mixes for, say the "Off-Price Mall of America," or the "Power Center of America," or the "Fashion Mall of America." For example, if you were developing a fashion center that incorporates quality leaders across the country, the retailers that you would want to include appear in figure 10. Bloomingdale's, Neiman-Marcus, Nordstrom and Marshall Field's anchor the "Fashion Mall of America."

MaJor Issue No. 4: Research Needs for the 1990s

The 1990s will be an era of increasing fragmentation in retail and media. Gone are the days of mass marketing. Shopping center developers will need to find the niche that gives their centers quality growth opportunities. Research will be required that is appropriate for this decade.

Information users deserve data that is accurate and actionable for the needs of market analysis of shopping center development. The critical criteria for choosing an information source include:

Local market information

Large sample sizes

True single source

Cross media measurement

Is the sample size large enough for micro-marketing? All consumers are not the same. If we divide our sample, is it large enough to efficiently measure that segment?

TABLE

BENEFITS OF A LARGE SAMPLE SIZE

For example, MA*RT measures 5,000 to 18,000 respondents. How many other sources go much beyond 1,000? Look at the significance of sample size. If you were targeting affluents and then broke the group further, would you make million dollar decisions on a sample under thirty?

Is the information from a true single source, or is it merged data? If you want to know about my retail behavior or my media usage...ask me, not someone who looks like me. Not someone who lives in my zip code.

Media habits may not be something you think of, but any master plan must include procedures for reaching and communicating with targeted groups. Developers need this. Retailers need this. What is the best mix of media? You need cross-media measurement, not just TV or radio ratings or newspaper circulation.

As you search for tools appropriate for the 1990s, look at syndicated consumer surveys developed for the complexities of this decade. Look for one that will allow you to answer many critical questions you ask of research, and enable you do so from the comfort of your office. One that provides a detailed local market database, with comparable information across the nation. Isn't this what you have been looking for?

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