In The News

Understanding the personality of your targeted shopper is the first step toward effective retail marketing.

“While demographics matter very little, there are two critical personality dimensions that will define shoppers in the new shopping reality,” said Wendy Liebmann, chief executive officer of WSL Strategic Retail, a retail and marketing strategy firm. “There are people who lived within their means during the recession and will continue to do so, and those with the shopping gene who live to shop and will do it a lot.”

In a recently released survey, 2010 How America Shops MegaTrends Study, The Odyssey Begins to the New Retail World, WSL identifies five shopper personalities:

– Shop-a-Lot Sue. She loves to shop, and although she has limited means — a household income of $60,000 — this is “not a deal breaker,” the survey found. “Sue knows she doesn’t have much to spend, so she shops smart, which lets her buy more.” She often opts for online options or chooses mass merchants such as Wal-Mart or even dollar stores. “She’s given up her aspirations for big-name brands and is OK with less.”

– Miserable Mona, who also has a household income of around $60,000. She is “so jaded by her financial situation that she finds no pleasure in shopping. Making ends meet is a constant struggle.” Although she, too, shops at discount or dollar stores, she doesn’t use online tools to help her.

Although both Sue and Mona are discount-store shoppers, retailers are better served marketing to Sue with coupons and sales promotions. “As a bargain hunter, she will return again and again to the places that reward her hunt,” the survey found. Merchants should also strive to make their stores as attractive as possible and offer as much “aspirational merchandise” as possible to appeal to this shopper.

– I’ll Pass Patty, who is apathetic about shopping and views it as a necessity. She has an above-average household income of $90,000 but lives within her means. She often opts for online shopping to avoid having to go to stores. “To her, smart shopping is no shopping,” the survey said. “Low price is important, but not if it means having to shop around.”

– Bubble Barbie, who spent the recession living in a bubble, ignoring everything and continuing to shop. Her household income averages $72,000, and she visits stores often although her debt level is high. “Bubble Barbie is the best reason to keep doing attractive displays of new products that stop her in the aisle and add more to her basket,” the survey said. “Sales and discounts are good, but not necessary for her to buy.”

– Chic Chic Charlotte, who has a high household income, around $101,000, and loves to shop. But even she was impacted by the recession and will buy less than she had in the past. “The more affluent have developed a case of retail guilt. She is not as spendthrift as she was in the Nineties. Reassure her that you are offering her value.”

Darden Restaurants boosts payout by 28%; PetSmart launches new stock buyback.
THE WORLD’S LARGEST CASUAL-DINING company, Darden Restaurants, served up a meaty 28% dividend boost last Wednesday. It was the 42-year-old Orlando, Fla., company’s fifth consecutive annual enrichment, and it brings the quarterly payout on common stock to 32 cents a share from 25 cents. Darden, whose eateries comprise Red Lobster, Olive Garden, LongHorn Steakhouse, Capital Grille, Bahama Breeze and Seasons 52, has been disbursing dividends since 1995, when the company went public.

The new payout will be distributed on Aug. 2 to investors of record July 9. The ex-dividend date is July 7.

Along with the sweetened dividend, Darden announced results for its fiscal fourth quarter (ended May 31) that weren’t as appetizing as Wall Street had expected, even though it has been saying all along that sales trends could fluctuate because of tight-fisted consumers and the uneven economic recovery. For the quarter, Darden’s profit slipped to 80 cents a share from 87 cents in fiscal 2009 (which had one extra week), while revenue declined 5.7%, to $1.86 billion. Analysts surveyed by Thomson Reuters had predicted earnings, on average, of 88 cents on volume of $1.89 billion.

But Darden is upbeat about fiscal 2011. It expects earnings per share for the full year to grow 14% to 17%, and sales to gain 5.5% to 6.5%. Capstone Investments appears to echo Darden’s optimism, calling the company “the best of the breed in a tough economic environment.” The firm initiated coverage of the stock earlier this month with a Buy rating and a $51 price target. After setting a 52-week high of 49.01 on the Big Board April 23, Darden’s stock was recently quoted at nine points below that level, for a 3.23% yield. In fiscal 2010, the company bought back two million of its shares.

A YEAR AGO, the nation’s largest specialty retailer of products and services for pets, PetSmart, more than tripled its dividend and launched a $350 million stock buyback. Last Monday brought a 25% payout hike and a new $400 million repurchase plan.

The enhanced quarterly will be 12.5 cents a share, up from a dime. Holders of record July 30 will receive the dividend Aug. 13; the ex-date is July 28. Disbursements were initiated in June 2003, and last year’s increase was the first since 2004. The buyback authorization, which expires in January 2012, will replace the $103 million remaining from the earlier program.

CEO Bob Moran said Phoenix-based PetSmart “continues to generate cash well above the amount needed for optimal reinvestment in our business.” He added that “the return of excess cash to our stockholders…reaffirms the stability and predictability of our cash flow as well as demonstrating the continued strength of our business.”

PetSmart’s results have held up well during the recession. In its fiscal first quarter (ended April 30), earnings surged 20% on a 5% sales advance, topping analysts’ estimates. The company also raised its full-year profit guidance.

Traded on Nasdaq, PetSmart, which yields 1.62% with the new dividend, is priced a few notches under its 52-week high of 34.93, set May 12.