Transcripts

Commentary- Retail's True Value

SUSIE GHARIB: Tonight's commentator says, when it comes to retail, the recession has consumers seeking value. She's Barbara Kahn, dean of the University of Miami school of business administration.

BARBARA KAHN, DEAN, SCHOOL OF BUSINESS ADMIN., UNIV. OF MIAMI: Given the current economic situation, many business people are asking whether old marketing rules still hold. Will consumers dial back to depression mentality and buy only necessities? Must retailers offer deep discounts to get consumers into stores? No one knows for sure, but if we think about the past, we know that firms must adapt. Pre-1990s, when markets were less competitive, many firms were product-driven. Profit maximization was tied to market share -- sell as much as you can. In the mid-1990s, markets got more competitive. Firms had to segment their markets and deliver what their best customers demanded. In the past decade, the Internet connected the world as never before and customers could easily share product information, so firms had to cater to the total customer experience rather than focusing merely on the transaction. But what about today? There are two trends occurring. First, high unemployment and big market losses have made consumers poorer. Consumers will demand higher quality for a better price. It's not about providing deep discounts, but rather about providing better value. No more glitz, no more bling, but the real thing. Second, consumers trust has been violated. Ponzi schemes and the instability in the markets have threatened consumer confidence. Consumers are demanding accountability. The winning firms will be those that one, provide real customer value and two, communicate why they can be trusted. I'm Barbara Kahn.