Controversial

Three Essential Retail Truths (You Can Learn From Donald Trump)

Amazon is looking to create special air zones for its delivery drones, Macy’s has gone full Motown in an attempt to capture back to school sales, and retail sales are grinding to a halt internationally. Millennials in the U.S., however, continue to spend bravely.

And that is what passes for a slow news week around here.

So how does one keep up with everything the world of wonders could teach you about the whole wide world of retail each week when there is so much data at play? That’s easy — we’re going to do it for you. We have the three essential lessons of the week, brought to you by a source you may not have quite expected: This week, we turn to the media antics of Donald Trump.

Bringing Branding Back

First off, let’s be clear – this is not an endorsement in any way shape or form. But his rising poll numbers have piqued a curiosity as to why he is outpacing, and by a wide margin in some polls, what others might characterize as the front-runners. And while early primary votes are notoriously indicative of nothing more than the eccentricity of early primary voters, it seems people want more of the Trump brand in this race, at least right now. 

Which interestingly has more or less been the secret to Trump’s empire building success over the last two decades or so.

Though Donald Trump’s Wikipedia page indicates that he is a real estate developer, Donald Trump’s business is not exactly taking on the risk of digging holes in the ground and building buildings. Instead, he licenses his name. Since 2007, he has affixed his name to luxury condos, casinos, books, golf clubs, an airline, a furniture collection, a menswear label, boxed chocolate, loose tea and bottled water. Last year he bought a central Virginia vineyard in a foreclosure auction, meaning even if we never get a Trump presidency, Trump wine is almost certainly in our collective future.

And Donald Trump has achieved this under the interesting circumstances of decreased brand loyalty among consumers since the Great Recession. According to Deloitte’s annual “American Pantry” study, in 2015, 73 percent of brands saw a decline in their “must-have” status. Must-have indicates that consumers would purchase them without regard to whether they are on sale.

So how does Donald Trump provide the retail lesson of the week? According to the same report, signs are starting to improve for winning back that brand loyalty. The number of consumers who would consider buying a store brand over a national brand has jumped 10 percent and is now up to 43 percent, its highest level since 2007. Consumers are also shopping more spontaneously than they have in recent years – 51 percent are making their decisions at the shelves. Among those, 81 percent report that previous experience or knowledge of the brand is a driving factor in purchases.

“This is a critical moment for consumer product companies,” said Barb Renner, vice chairman, Deloitte LLP and U.S. Consumer Products leader. “While the majority of consumers say they are committed to sustained frugality year after year, our findings point to early signs that they may finally be responding to a belated but increasingly strong economic recovery.”

Price, the survey showed, continued to be a driving factor. However, innovation or novelty is rapidly coming up behind in second, which leads to the week’s big lesson.

Innovating The Experience

As of the writing of this article, Donald Trump was fending off his latest two gaffes. This week’s special so far involves a member of his staff threatening a “reporter” at The Daily Beast in colorful language. The other involves Trump’s outraged reaction to a lawyer with a breast pump.

We have no opinion on these issues, only the observation that the latest round of “the end is here,” “Donald has finally gone too far” headlines have kicked off. 

So far Donald Trump is sticking to his previous strategy of sticking with whatever it is he says — and defying the predictions like this one from The Wall Street Journal after Trump’s comments on Senator John McCain’s war record: “It came slightly ahead of schedule, but Donald Trump’s inevitable self-immolation arrived.”

And yet Trump refuses to catch on fire, no matter how many matches he lights. Interestingly, this uptick in popularity as a candidate does not seem to be accompanied by voters who attest to liking or agreeing with him on many issues. Donald Trump negative ratings are 2:1 over his positive ones — and those number get worse on controversial issues. Polled voters mainly report liking Donald Trump due to his directness, lack of political experience and willingness to diverge from normal primary candidate behavior.

The retail lesson of the week: Consumers (like voters) are drawn to novelty.

According to Deloitte, over half of consumers are drawn to a new or novel product and a quarter will pay more than regular market price for something “innovative.” Consumers are also increasingly willing to pay a premium for quality, with over a third naming quality and differentiation in the market as a more important consideration than price.

And while Trump, branding ventures aside, is hardly classified as a human luxury good, he is certainly novel in a crowded political field where everyone else is trying desperately not to say anything controversial.

It’s About Conversions – Not Clicks

While the rapid rise of Donald Trump’s presidential campaign may seem to stand as monument to the power of shock jocking one’s way to the top, the final essential retail lesson of the week comes more in the form of a cautionary tale than lauding of Donald Trump’s surprising political acumen.

Getting clicks is not easy, but it is much easier than getting conversions from those clicks. For a presidential candidate, those conversions come in the form of actual ballots cast in actual polling places. For retailers, it comes when the deal is sealed with the customer and the goods or services are bought.

When talking to pollsters, people might say they will vote for Donald Trump — but it is hard to imagine that ⅔ of those people will do so despite agreeing with the man politically and personally.

And retail this week has its own illustration of the inevitable failure of the shock and awe method of branding: the slow-moving train wreck that is American Apparel. After yet another quarter of dismal stock performance, while also facing a $15.4 million debt repayment bill in October, some have serious doubts about its ability to make good.

The company once hailed for the “edgy” “free-thinking” and “innovative” eccentricities of its founder and former CEO Dov Charney soon found itself immersed in lawsuits and controversy and found that, over time, consumers were more turned off and bored by the company’s marketing than enthralled by it. American Apparel remained a popular discussion topic on Facebook, but that discussion soon did more to kill revenue than bring it in.

So what did we learn from the data and The Donald this week? Branding might be ready to make a comeback, and sometimes consumers really are crying out for newness, and they are flexible about how they get it.

But not all newness converts well into a long-term plan – and being shocking wears out its welcome (and its earning potential) faster than you’d think.

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