X Marks The Spot For Low-Key Sales

The following article is reprinted with the permission of Nation's Business magazine. Nation's Business serves as a resource to the owners and top managers of small businesses (fewer than 100 employees) by providing practical, how-to information about running and growing a business. To subscribe to Nation's Business, call 1-800-210-8149.

By Laura M. Litvan

When it comes to appealing to Generation X--young adults ages 17 to 30--few small business owners have it as easy as the seven founders of the Speakeasy Cafe.

Their Seattle "cyber-cafe'' offers espresso and access to the Internet--two things Generation Xers seem to crave in unlimited quantities.

But perhaps more important, all seven are Generation Xers themselves, so they instinctively understand the retail approaches that generally work with young consumers.

For example, Mike Apgar, the cafe's 27-year-old president, says one prevalent attitude among his peers is strong skepticism of pushy salespeople. So even though the Speakeasy relies for revenue partly on selling customers computer-related services--such as help in establishing home pages on the Internet's World Wide Web--the staff is hands-off with customers. Salespeople with computer expertise are positioned behind an information desk, and they approach only those customers who ``look lost,'' Apgar says.

``We're not interested in any kind of hard sell,'' he says, and consequently, ``if customers have any questions, we're careful just to answer those questions and not come across like we're trying to sell them something.''

That may sound pretty passive, but Apgar says the soft-sell approach works with his mostly twenty something customer base and complements managers' efforts to create a comfortable, inviting atmosphere for all patrons.

Even without the benefit of peer-group insights, many retailers across the country are adopting similarly subtle approaches to attract Generation Xers. In today's cutthroat retail environment, store owners are grappling for ways to connect with these consumers without putting off well-heeled older shoppers.

``The issue of appealing to Generation X is affecting retailing across the board,'' says Carol Kaufman, associate professor of marketing in the business school at Rutgers, the State University of New Jersey, in New Brunswick. ``I can't think of a retailing segment that shouldn't take Generation X into consideration,'' she says.

But many retailers don't know whom they're dealing with. Broadly branded as pessimistic ``slackers'' with bleak financial futures in an economy marked by corporate downsizing, Generation Xers are perhaps the most misunderstood consumers in the marketplace today, a number of marketing experts say.

Many retailers make the mistake of treating Generation X shoppers as if they don't have money to spend, says Karen Ritchie, who oversees the buying of all of General Motors' broadcast and print advertising and is the author of Marketing to Generation X (Lexington Books, $25). Ritchie says Generation Xers are generally well-educated, and many have a substantial stash of cash, if only because many live with their parents into their late 20s and delay starting their own families until they're older.

Ritchie also thinks the talk about poor long-term financial prospects for Generation Xers is mostly myth. ``The fact is, no one knows whether this generation will or won't be poor yet,'' she says.

To be sure, many Generation Xers are just getting their first jobs. Consequently, last year the median individual income of U.S. adults ages 18 to 29 was only $14,343--$7,375 less than the median for Americans of all ages--according to Simmons Market Research, based in New York City.

But even though their income levels are lower than those of the general population, these younger consumers seem driven to shop, making them strong candidates for targeting by retailers, says Sean Keller, associate director at Yankelovich Partners Inc., a Norwalk, Conn., firm that tracks consumer trends.

Research by Yankelovich indicates that consumers ages 17 to 30 are more likely than other shoppers to spend time in retail stores, with many using mall-browsing as a stress-buster. ``For retailers, half the battle is won,'' Keller says, referring to Generation Xers. ``They love to shop.''

Small retailers trying to win the other half of the battle-luring these shoppers in a way that won't conflict with their efforts to appeal to other customers--should consider these suggestions regarding their overall store strategies, the experts say:

Present Lots Of Options. Compared with baby boomers, younger adults are less loyal to designer labels or other brand names, Keller says. Instead, they thrive in environments where they have choices, and they seem to equate choice with power.

Some retailers who serve a broad age range of patrons lay out their stores so that customers are presented with many options and lots of product information--an approach that they have found appeals particularly to Generation Xers.

At Ikea U.S. Inc., a 13-store chain specializing in inexpensive furniture that customers assemble themselves, stores are designed to showcase an array of very similar items that differ slightly in price and quality. Tags on each item provide some detail about the product for use in making comparisons.

Younger shoppers respond enthusiastically to this retailing environment because they like to make the ultimate decision about what value means to them, says Pamela Diaconis, a spokeswoman for Ikea U.S. Inc., a subsidiary of Ingka Holding B.U., a retail concern based in Sweden. ``The important thing, though, is that you have to offer a quality product at each price level,'' she says.

Another retailer that focuses on choice is Borders Books and Music. Owned by Borders Group Inc., in Ann Arbor, Mich., the chain's 117 stores offer books and periodicals as well as music on compact discs and audio tapes.

At most Borders stores, shoppers can use earphones to sample offerings from a menu of up to 500 CDs and can use video kiosks to find all the titles of a favorite recording artist, for example, or to read music reviews of popular sellers.

Meanwhile, with nary a glare from a retail clerk, shoppers at Borders stores can page through the magazines in display racks and even sit down and start reading a book they might decide to purchase. ``What we're trying to do is create a browsing atmosphere,'' says Borders spokeswoman Molly Zink.

Don't Rush Customers To Buy.

Generation Xers, more than other adult generations, are astute about slick sales tactics and can be turned off by sales clerks who try to push them, says Wendy Liebmann, president of WSL Strategic Retail, a New York City-based retail consulting firm. ``This is not a consumer who believes in all the hype. You can't use a hard sell or be pushy.''

To appeal to Generation X, retailers need to train their sales clerks to act as information resources for shoppers, says Keller. These shoppers demand honest information and expect sales personnel to be able to answer customers' questions.

The challenge for salesclerks, Keller acknowledges, is to be on hand to provide answers, without hovering. ``A retail clerk has to act like the perfect waiter-magically appearing when needed, but disappearing otherwise,'' he says.

Some companies have been investing more in training to reduce the chances that their clerks will be stumped by questions from customers.

For instance, at Comp USA Inc., a national chain of 95 computer-products stores, managers have phased in satellite training seminars to acquaint salespeople with the latest developments in software products. Software manufacturers can communicate with clerks at all stores to help them learn how to answer customers' questions expertly, says Larry Mondry, executive vice president of merchandising at the Dallas-based company.

To generate repeat business, Comp USA is encouraging its salespeople to focus on serving as product experts for customers rather than concentrate on closing sales quickly just to earn commissions.

In line with that goal, the company has eliminated commissions and put salespeople on salary. ``We want salespeople who are friendly, information-providing, and unobtrusive,'' Mondry says.

Avoid Promises You Can't Keep. Generation Xers are ``turned off by anything that seems cliche or insincere,'' says Judith Langer, president of Langer Associates, a New York City market-research firm. As a result, she says, retailers should probably hold off on claims of social responsibility, such as a focus on environmental concerns, unless those claims are backed up by action.

Apgar of the Speakeasy Cafe makes the same point. When the cafe opened last year, he and other managers wanted to emphasize to customers that the Speakeasy was in business not just to make a profit but also to serve as an information resource for the Seattle community.

To keep that promise, he says, they created their own home page on the Internet that includes a listing of local cultural events. In addition, they worked with local groups that aid the homeless to help the organizations establish their own home pages.

Use Technology To Expand. Younger consumers who grew up using computers in their homes and schools are more likely to use on-line services and the Internet to make retail purchases. Research by the Yankelovich firm, for instance, shows that Generation X shoppers are four times more likely than other consumers to shop by computer.

In one instance, a South Carolina retailer, Barbara Rackes, sold her three women's clothing stores a few years ago and then established an on-line retail presence with a new catalog on the Internet in January. Her new company, RackesDirect, based in Columbia, is marketing custom-tailored career clothing for women through a home page on the Internet.

While the average RackesDirect shopper so far is about 35 years old, the company has already realized that one of its biggest growth areas will likely come from Generation Xers, says Rackes, owner of the company. She says she is planning some changes designed to appeal particularly to younger shoppers, who often hunt for bargains. For example, she intends to introduce some low-cost accessories into her mostly upscale lineup.

In addition, she hopes eventually to incorporate moving graphics, including a ``virtual fashion show'' scene, in which simulated models will walk down a runway in her products.

``I think younger Internet shoppers are looking for flash,'' Rackes says.

For the longer term, many experts who are tracking Generation X's preferences advise retailers to think through some of the changing needs these youthful shoppers will develop as they grow older.

While it's difficult to predict things like fashion trends, a little common sense can provide most retailers guidance on some future trends for hotter-selling products.

Just as the baby boomers traded in their sports cars for minivans as they matured and started families, so will Generation Xers boost sales in certain categories as their lives change.

For her part, author Ritchie suggests that retailers anticipate demand within a few years for goods that are popular among young married couples, as more young adults settle down. Children's clothing and home furnishings are just two of the categories of products that could see growth, she says.

But ultimately, according to Ritchie, the most important point for any retailer to remember is to give Generation Xers what every shopper wants: to be taken seriously and offered value. She adds: ``The important thing is not to underestimate the clout of this market.''