Archive for the 'Devon Wolfe' Category

Trickle-up Economics

Published on March 8, 2010 in Devon Wolfe. 0 Comments Tags: , , , , .

by Devon Wolfe, Pitney Bowes Business Insight

Though the rising Dow Jones average indicates a recovery of sorts, we still are seeing tepid results at the local level. What’s the disconnect?

As one who studies consumer behavior, my biggest concern in this Great Recession has been the collapse in demand. As long as individuals and businesses believe that they can live without spending (or worse yet, as long as they don’t have money to spend), demand is going to be weak. And of course, demand is trickle-up! If the bottom isn’t buying, it creates a ripple effect throughout the supply chain. This is why inventories are so low right now.

Many have lamented about the plight of the small business in the recovery, claiming that lack of credit and uncertainty about health care and taxation are causing small business to sit on the sidelines. But recently, I ran across an article in the Washington Post that seems to confirm what I’ve suspected all along. Citing a survey by the National Federation of Independent Businesses (NFIB), “51 percent of small-business owners reported a lack of sales as their greatest challenge. Only 8 percent cited a lack of loans.”

In other words, capital is part of the problem—but coming up with something people want to buy is a much bigger problem. Now apply this to commercial real estate. Ancillary tenants—the little guys—are the tenants that are the most profitable to shopping center owners, making up for the low-rent deals that the anchor tenants pay. If they can’t lease up (as we’re seeing), real estate cash flow and profitability will continue to be challenged. Given the debt burden—well, you get the picture.

In the end, until we get the consumer confident and spending—that means employment and an end to the fear of job loss—demand will continue to be weak.

Notes from the ICSC Research Conference 2009 in Phoenix

Published on October 29, 2009 in Devon Wolfe. 0 Comments Tags: , , , , , , , .

Devon Wolfe, Pitney Bowes Business Insight

About 170 researchers and industry professionals gathered in Phoenix for the annual ICSC Research Conference, which is a gathering that has always been part networking, part content. The numbers this year were down considerably from years past, but the group was still spirited and engaged.

The ICSC group has long been dominated by the department store and shopping center research departments, yet this year, the higher numbers of attendees were from value, low-price point retail, just as we’re seeing in the sales results posted by various chains. Drug stores, dollar stores, and discount apparel were all well-represented. The conspicuous absence was big-box specialty retail. Very few attendees came from that segment of the industry, likely due to the slowdown in large store construction.

Instead, many operators I talked with are opportunistic and looking for great deals in the marketplace, while the developers and shopping center owners are hoping that the coming commercial mortgage-backed securities (CMBS) storm doesn’t wreck the rest of their business. Economists presenting at the conference were quick to point out that while we’re nowhere near recovery at this point, it’s inevitable that things will start to pick up within the next year, but slowly. Even though we want to think that this recession is drastically different than all others in the past, it isn’t necessarily. In the past, just as today, job recovery tends to follow market recovery, which of course means that it’s going to take a while for retail spending to recover completely.

On the methodology front, one thing to watch and prepare for is the 2010 U.S. Census, which has the distinction of being the first where the American Community Survey (ACS) will replace the long form in its entirety. Without listing all the details here, the important thing to remember about the ACS is that it uses sampling gathered on a periodic basis at different levels of geography. This means that while state level information will be reported annually for the previous year, block group information is reported each year for an average of the previous 5 years’ surveys. Sound confusing? It will be. We at PBBI are working on solutions to help take the guesswork out of using these data. Stay tuned . . .

In the meantime, we welcome you to download a free whitepaper on the impact the ACS can have on your business.  We also encourage you to visit the census website for more information on the ACS.

Location Intelligence Still Matters

Published on July 27, 2009 in Devon Wolfe. 0 Comments Tags: , .

Devon Wolfe, Pitney Bowes Business Insight

We’re sending our first son off to college this fall at the University of Oklahoma. We live in Michigan. So, as we’ve been looking at the various logistics of setting up a 17 year old on his own 1,000 miles away, we’ve had some decisions to make. One of those decisions has been where to set up his bank account. I think the story of how we made that decision has a lot to say about the changing dynamics of location in the Internet world.

Our thought process went like this: He needs a bank that has ATMs and a branch close to his dorm. So, we went to Google, typed in “banks Norman OK” and started looking around. Meanwhile, my son went to a new OU student site on Facebook and learned from other students where some ATMs were located that were not on the Google map (imagine that, incomplete data on a map!!). As it turned out, one of the ATMs not on the map belonged to a large nationwide bank that just opened a branch near our home in Michigan. Once we saw that, we took a few minutes online to compare account features, learned that they were all about the same, and decided to open an account here in Michigan at the large nationwide bank before he goes to school.

Now, here’s where it gets interesting. When we open that account, his account will be “domiciled” at the bank near our home address, which would on the surface seem logical since it’s quite close to our house—but the reason we made the decision is primarily about where he’s going to school—the proximity of a branch near our home was just an added bonus.

So what can we learn from a location strategy perspective? First, the old, time-honored location criteria about visibility and local media awareness are changing in our Internet-centered world. Today’s consumers use Web searches and social media instead of neighbors, phone books, and direct mail flyers to make their decisions about where to go. It’s still all about location, but the information is gathered in a much different way than in the past. Second, our example says a lot about the inherent advantages of a large network. The bank that got our business isn’t first in market share in either the Oklahoma City or Detroit markets, but due to its network coverage, it met the needs of a transient person. Does ubiquity at a lower metro market share afford an operating advantage that is sustainable?

I realize of course that most customer decisions are not quite the same as those of a college student going out of state. But, the fact is the consumer’s way of interacting is changing rapidly—which begs for more consumer research into the way that people make location decisions today.

What a Difference a Year Makes

Published on July 17, 2009 in Devon Wolfe. 0 Comments Tags: , .

Devon Wolfe, Pitney Bowes Business Insight

This time last summer, I was enjoying the opportunity to work out of our Windsor, UK operation for nine weeks.  Without question, it was one of the most rewarding experiences of my career, as I got to see firsthand the nuances of doing location research in a different market than the United States.

 

But as I think back to just one year ago, I’m startled at how different things are.  The UK economy was still robust and growing at the time, despite the fact that gasoline (that’s petrol over there) was nearly $11 per gallon.  Many of my co-workers had heard about the slippage that was becoming apparent in the US economy and asked me about our business conditions.  And of course, the most common question in the UK was, “Will the Americans vote for Obama?”  Little did we know what was about to come. 

 

As I prepared to return to the US, I wrote my North American staff an e-mail recounting my observations.  One of those observations was how things change over time.  In Europe, history is everywhere around you—you can walk down a street and see evidence of 500 years or more of change.  But in the US, everything still seems more or less new.  We don’t have as much of a sense of history, and so big changes can seem uncomfortable to us, even though they are always rife with opportunity.

 

Now, a year later, we are experiencing profound change, discomfort, and opportunity in our businesses.  And more specifically, we see it here at PBBI.  A dramatically different economic environment, Web 2.0, social media, cloud computing, and increased demand for lower-cost solutions all are combining to create both the need and the opportunity to make dramatic changes in our offerings that will serve our customers in ways we had never imagined.

 

We’ve already responded to this change earlier this year by introducing a new service, MarketPulse, that allows retailers to understand and predict how macroeconomic forces affect consumer demand at the local level.  MarketPulse is available both as a stand-alone offering and as a component part of our forecasting and market planning solutions.

 

But there’s more to come.  We recently opened up a virtual Suggestion Box for our Strategy & Analytics consulting staff, and we received over 80 responses for innovations that will make our offerings better.  We’ve now grouped those into eight broad initiatives which will be pursued in the coming months.  I am truly excited about these initiatives and what they will mean for the way we serve our customers in the near future. 

 

Once we get those initiatives finished, we’ll roll up our sleeves and start a new set.  Change never ends . . .