News that retail sales fell in March surprised many analysts, but it points to something retailers should be seriously concerned about: That their customers have fundamentally changed and those retailers better change along with them or they could be doomed.
Analysts will tell you that consumer confidence ultimately drives the economy. While that’s true, it’s more than just about confidence. It’s also about what consumers seek. What they have confidence in.
In tough times, consumers seek refuge, which is about more than just saving money “in the mattress.” It also means deciding to spend money on what feels like the “right thing to do” instead of the “best.” They seek something that speaks to comfort and expertise, as well as other motivators.
What’s frightening about all this is that so few retailers have made any kind of adjustments in terms of speaking to the consumer. Many have made superficial adjustments – creating ad campaigns that basically say, “We understand” – without truly understanding that consumers are angry and unhappy with retailers and other providers. Understanding now they have the power, consumers are watching to see if anyone makes changes to address their needs.
Is it any wonder the auto industry took the biggest hit? Sales of vehicles and parts were down 2.3% in March. The industry hasn’t exactly inspired a lot of confidence and, from the consumer’s point of view, the big U.S. automakers look and feel the same as they did a year ago.
The automakers are hopefully working to change all that, but, as it stands now, none of them offer consumers much in the way of expertise or doing the right thing. In fact, there are few industries that seem more out of touch with consumers. (Although the airline and banking industries have put themselves in the same kettle.) Even if you’d like to buy a new car, the “right” thing to do now is simply not to buy one at all.
The decline in sales in March may just be a blip, and I certainly hope so. Consumer confidence does drive everything, but the sales numbers might also point to a shift in how consumers view their spending that’s more permanent that we first thought. Unless the other end of the spectrum – the retailers themselves – shifts along with them, sales numbers will continue to fall.