The economy is sluggish. The Fed is finding its tool bag near empty. Unemployment is still running high, and consumers are more than ever becoming value-driven. Look at the companies that have experienced any measure of success in recent years and you’ll no doubt find off-price discounters at the top of that list.
The new HomeGoods store opened its doors adjacent to Alderwood Mall on June 24. You would have thought it was Black Friday as hundreds of shoppers lined up outside the off-price store prior to the 8 a.m. opening, to be the first to experience this newcomer to our region.
There is the perception by some consumers that if you pay a low price, you’re probably buying junk. But the notion of value extends far beyond just the price. Consumers need to be assured that this business is backing what it sells. The service needs to be there; and so does the positive experience.
Phil Tracey, HomeGoods spokesman, said the Lynnwood location and a second store in Federal Way are their first home fashion design stores in Washington. While these will be the only two stores to open this year, the customer response at both locations certainly signals that HomeGoods is a good fit for the Northwest.
I experienced the Alderwood opening; there was a carnival atmosphere. Free handouts, a photo booth, dignitaries from the corporate offices and a store chock full of new and different merchandise for the home. “We call it HomeGoods Happy,” said Tracey, as he spoke of the experience they offer to a value-driven customer. “We know that many retailers are struggling, yet the timing couldn’t be better for our expansion into the Seattle market.”
The HomeGoods website notes, “We have great growth opportunities with our value proposition. Whether the economy is weak or strong, we believe value is here to stay!”
The HomeGoods business model hinges on great value to customers and products that move off the shelf quickly. “We receive daily shipments to our stores and our inventory is fresh and changes daily. It’s not unusual for customers to visit our stores several times a week to see if they can discover new treasures,” said Tracey.
And don’t forget location. The strategy to straddle the Seattle metro market was purposeful. Apparently, value-driven customers live in the ‘burbs. Lynnwood and Federal Way are outstanding choices for HomeGoods. Tracey also noted that “people are willing to travel to find value, and a 15- to 20-minute drive is certainly within reason.”
HomeGoods is a division of TJX Companies, which also carries familiar brands of Marshalls, T.J. Maxx, T.K. Maxx and Winners. The store is a discounter, built on a value proposition that seems to resonate with frugal consumers.
Translating the lessons of a big corporation like TJX to a small business enterprise can sometimes be difficult. But when it comes to value, anyone can compete with the right mix. You don’t need to have a “big business” bank account, line of credit or leverage; what you do need is the big business attitude that sets a high standard for delivering a good value proposition.
So what is value? Value can be very personal. It’s about satisfying a need or a want. And it ultimately creates a positive sense of confidence by the consumer that theirs was in fact a great choice.
To illustrate, let’s say a 100-count bottle of extra strength acetaminophen is selling for $5. If the consumer is currently experiencing a severe headache, then the value of an effective pain reliever to that consumer is quite high — especially if it kills the headache in a single dose. Another customer may see the acetaminophen bottle and think the product is not so valuable — although perhaps still a decent price.
Here’s where you’ll find some great takeaways. As a consumer, you’re already conditioned to look for value. You make value-driven choices with your everyday purchases. You look for the right product that satisfies the greatest need and you consider both tangible and intangible return on your investment.
Now flip the page and think of your customers — regardless of whether you are in a retail sales or service industry. You have a marketplace filled with consumers who identify with value far more now than in the past. Your goal is to connect with the market by attending to your value proposition.
We cannot change the economy. But business owners and entrepreneurs who deliver on the value proposition will remain competitive and will experience success in the long run.
Juergen Kneifel is a senior associate faculty member in the Everett Community College business program. Please send your comments to firstname.lastname@example.org.