Apr 10, 2009

Retail 3.0: Keeping customers in an economic downturnBy Donna KatoMercuryNews.com

Earlier this week, I wrote about a study that said consumers are downshifting their shopping habits during the current recession, and that their frugality might linger after the economic recovery.

So what are retailers doing to counter that inclination and nab consumers during the downturn? And how will they keep their customers coming back afterward? For the small retailer, now is the time to concentrate on retaining valued customers, retail analysts said.

“You have to protect your top 20 percent of customers because your competitors will come after them and it will be devastating to lose them now and for later,” said industry expert Mark Wilcox of Affinity Solutions.

Local merchants have an advantage over the big guy: They intimately know their community, can closely monitor store traffic, form personal relationships with shoppers to gain insight and give discounts without corporate hierarchy, he said.

A few are even starting a business, as shoe seller Jill Varni did earlier this month in downtown Los Gatos.

“I’m nervous, but I did a lot of research and I know there’s definitely a community here that has money and this is a town that really wants its boutiques to succeed,” said Varni, a third-generation Los Gatos resident who opened She She Shoes on Santa Cruz Avenue, the town’s main shopping street. With her longtime connections and her selection of designer footwear in the $200 to $300 range, she’s positioned to entice women who were buying $600 shoes before the economy tanked.

“If you’ve been buying Jimmy Choo, you may be feeling guilty about paying that much but still aren’t ready to give up on wearing a designer shoe,” she said. “I know I can’t compete with the Nordstroms and Bloomingdale’s, but I can provide great service.”

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