Trump Economy Has Been Good To Retailers, But Retailers Should Avoid Getting Too Political
For retailers, one of the more actionable findings in a book full of them by Paco Underhill, Why We Buy: the Science of Shopping, is that after people enter a store, they invariably turn right to start their shopping trip. That makes the space to the right side of the door prime real estate for any retailer.
Now a new study from Walker Sands Communications suggests that how shoppers lean politically, whether to the right or the left, determines whether they will even enter the store and make that predictable right turn.
In a survey of 1,600 American consumers, conducted in February 2018, two-thirds (65%) of consumers said that the current presidential administration has impacted their shopping behavior. That is up an incredible 25 percentage points from last year when only 40% said the same.
Of note, the 2017 survey was taken immediately after President Donald Trump took office. What a difference a year makes.
Trump bump or bust?
At first blush one might assume that the roaring economy has taken the brakes off consumers’ previous hold on spending. I’m surprised President Trump hasn’t tweeted as much from this study’s findings. With retail up 4.9% in the first four months of 2018, there is plenty for him to tweet about. But I think the results of the survey are more nuanced than that.
It didn’t ask how the current administration has changed their consumer behavior, just if. So I reached out to Erin Jordan, in Walker Sands’ retail technology practice and author of its report, The Future of Retail 2018, to ask whether the Trump administration has changed their behavior in a positive, negative or sideways way, and specifically made them choose certain retailers and brands based upon how they align with the consumers’ perception of their political leanings.
There are plenty of juicy bits in the study for either side to draw conclusions from. The Trump administration has encouraged shoppers to spend: more than a fourth (28%) reported they shop more often this year because they believe the economy is better. This is up from only 16% last year, a staggering jump.
On the other hand, nearly one in five consumers (21%) report they shop less often at retailers that openly support President Trump.
“Consumers are more aware of brands’ social policies and are looking to retailers and brands as an extension of their own lifestyle,” Jordan said. “A majority of consumers (54%) reveal that their awareness and concern for brands’ social policies have increased since the election.”
While it is not always correct to assume that a brand’s position on social policies are a definitive indicator of its political stance, in today’s contentious political environment, consumers can’t be blamed for making that assumption.
“The political landscape has begun to more heavily impact consumers by changing their perspective on the economy and putting a new perspective on their purchase decision as a result,” Jordan explained and warned, “ Commerce is now being impacted by factors outside the scope of traditional retail.”
Can a corporation be politically neutral in a politically-divisive culture?
Increasingly corporations are being held to a higher standard to be socially responsible and good corporate citizens, whether they formally take a political stance. As a result, corporations are called upon to be concerned about the many issues that impact their customers’ lives, beyond which brand of toothpaste or toilet paper they choose at the store.
“Brands today are taking it to another level by advocating for causes, getting politically active and tapping into our sense of what’s right or wrong,” Ryan Erskine, a fellow Forbes.com contributor and senior brand strategist at BrandYourself, told me.
Erskine warns that if brands don’t stand for something, then they stand for nothing. Consumers today aren’t buying when corporations abdicate their social responsibility. “A brand that takes a political stance risks irritating consumers who disagree. But when your consumers are increasingly looking to vote with their wallets, political inaction can be just as risky,” he said.
Corporations need to put values not politics forward
Whether corporate leaders lean left or right, hate or support Trump, their corporations should rise above the political fray and stand for values and ideals that concern us all. The big opportunity, says Erskine, is “to stand up for values that are consistent with the brand’s messaging, earning further respect from consumers who are increasingly looking to vote with their wallets.”
For businesses, the consumers’ perception is the corporation’s reality. And consumers’ perception of companies is what The Reputation Institute measures. In the past year it found a significant decline in the reputations of the major U.S. companies. “The underlying reputation disruption we are seeing in the U.S. is driven by a crisis of trust,” said Stephen Hahn-Griffiths, chief reputation officer at Reputation Institute.
“In an era of tweet ranting, fake news, data privacy breaches and questioning of company ethics, the trust in big companies has eroded in the past year. Companies that are most trusted garner a stronger reputation,” Hahn-Griffiths continued.
In the latest RI study, good corporate citizenship, specifically how companies govern their relationship with employees and responsibility to customers, are driving consumers’ perception of the companies that they choose to do business with. “Fewer companies [are] perceived as embodying a sense of sincerity and genuinely caring. The absence of authenticity is fueling doubt among stakeholders,” he stated.
While Hahn-Griffiths suggests that “corporate reputation and politics do mix,” I see more dangers than benefits in getting down into the contentious political slugfest. By fixing on shared values, social responsibility and doing what is right and consistent with those values, corporations can rise above politics. Being a good corporate citizen doesn’t and shouldn’t mean being a Republican or Democratic corporation.
Trump’s economy tailwinds blow neither right or left
Looking to the future, retailers can count on their customers making more purchase decisions based upon their perception of how good or bad the store and the brands they carry in the store are, or in the case of Dick’s Sporting Goods, the actual products carried, e.g. automatic guns.
The Walker Sands study provides needed direction. In the case of issues that are important to making purchasing decisions, sustainability rose to the top of the list. Jordan further cites data from Nielsen’s Global Corporate Sustainability report which found two-thirds of consumers (66%) will spend more on a product if it comes from a sustainable brand.
Exactly what is a “sustainable brand” wasn’t specifically defined, but it is generally understood to mean “a commitment to protect the environment while providing a future for generations to come,” as Tammy A.S. Kohl writes in A Common Sense Approach to Sustainbility.
Sustainability is one of those fundamental core values that neither leans left or right, Democrat or Republican, despite how one side or the other tries to pull it.
Likewise, the economic tailwinds that the Trump administration is supplying blows neither left or right. Retailers and brands must take full advantage of it, but in their businesses they should steer a straight course fixed on shared, common human values on which we all can agree.