This holiday season, many shoppers will be motivated to spend on luxury goods and big-ticket items by a feeling of "If not now, when?" That's according to retailing guru Paco Underhill, founder and managing director of retail consultancy Envirosell. With the economy improving while the global political outlook remains unstable, Underhill says many shoppers will use the holidays as an excuse to treat themselves or their families to once-in-a-lifetime splurges like a Rolex watch, a boat, a second home, or an exotic vacation.
Underhill, who specializes in using anthropological research methods to study consumer behavior, thinks online retailers are hitting their stride by emphasizing convenience and enticing customers to visit stores. He applauds stores that improve the holiday shopping experience by putting festive gift-wrapping service on display. And he begs computer makers to finally come up with a PC designed for the kind of abuse any eight-year-old can dish out.
He elaborated on these and other observations in a recent interview with BusinessWeek Online Senior Writer Amey Stone. Following are edited excerpts from their conversation:
Q: What is your outlook for the holiday season?
A: I think it will be a good one. People are starting to feel better about themselves and their prospects as they read about all the good economic news. One of the hot buttons driving sales this season will be a feeling of, "If not now, then when?"
A significant number of people are going into the last third of their lives. The people with money are getting to a point where they're starting to see a turnaround in the larger economy but not necessarily in the political world. There are things they have always wanted, and they're thinking that if they don't get it now, they may never get it.
Q: What kinds of things? Luxury items?
A: There are different things for different kinds of people. It might be a second home, a Rolex watch, a boat, or an Alaskan cruise. People are in effect gifting themselves as well as gifting other people.
So, the first trend boosting sales is "Now or never." The second is that people are having children at a later age, so they have more money to spend on them. We expect big sellers to be intelligent toys -- things that people perceive as making kids smarter.
Q: You're talking about educational games and the like?
A: Right. But there's one product I don't know why the computer makers don't offer yet: A kids PC. There should be something on the market that is clearly meant for the abuse of an eight-year old -- something you can pour a can of Coke into and nothing would happen, a computer that can be dropped or taken to school. Nobody is doing that.
Q: Is there a third hot button for holiday sales?
A: This is kind of a poignant one. Retailers need to remember that while the majority of us are doing better, a significant minority is hurting. For them, the concept of gifting, really the Zen of gifting, is more important rather than the actual gift itself. That means delivering them inexpensive gift ideas that are practical or consumable. For an example: Pasta in exotic shapes.
For these customers, stores need to do a better job of wrapping these items. I've seen some stores recently that understand that gift wrapping is part of the theater of shopping. Watching a book disappear when it is wrapped fuels the fantasy and makes you imagine a child ripping open that packaging. It also reminds everybody else in the store that this is a place that sells gifting solutions.
Q: What are retailers doing better this year than last?
A: The merchant and the marketing community have woken up to the fact it's the quality of customer experience that governs whether they manage to sustain a relationship. Their goal should be to have the customer walking away thinking about the experience they just had rather than the price they paid.
Q: What companies are doing the best job?
A: I don't want to tout my own clients. Of the companies I have not worked for, the perennial winner is the Container Store. Williams-Sonoma (WSM) is another one I keep admiring.
Q: One recent trend in retail is that clothing sales are picking up. What are retailers doing right in that category?
A: The apparel community is adjusting to the culture shock of the disappearing social stratification of apparel. Both women and men now have articles of clothing they will wear that are bought at every level of the apparel food chain. For example, they'll mix underwear bought at Target (TGT), with Wranglers bought at Wal-Mart (WMT), with an Oxford shirt bought at Brooks Brothers, with a sweater bought at Lands' End (S), with a coat bought at Tractor Supply (TSCO).
The apparel industry is also adjusting to different types of customers. We've seen that with GapBody, which is taking on the underwear business. They recognized that there's room for a store for women who don't identify with the girly-girl image of Victoria Secret.
Q: How will online sales do this holiday season?
A: Online is doing fabulous. It knows where its place is -- it's about convenience and making good use of bricks and clicks. It's about leveraging relationships. It's not only a sales vehicle but a marketing vehicle.
For example, I got an e-mail from Gap which drove me into the store to look. That's a perfect seamless marketing effort. For places like Gap (GPS), they want my money, and they don't care how they get it -- whether I buy online or pick something up at a store.
Q: You had a big hit with your book Why We Buy in 2000. Are you working on a follow-up?
A: I have a new book coming out the first week of February. The title is The Call of the Mall: The Geography of Shopping. Why We Buy was more focused on people. This one is more on spaces. It's kind of a humorous travelogue of a visit to a shopping mall.