Social Cache.
A Nemo blog. Dealing with uncommon cents.

Click to watch…

Straight to the point. If you sell lingerie you might as well sell lingerie. BlushBerlin.com Via Illegal Advertising.

Because of the harsh economic climate, people are attempting to cut back on expensive extras. But, The Wall Street Journal is reporting that an undercurrent of guilt is pushing some to keep spending, even when they don’t really need certain items and services. A sense of empathy is sweeping over some who know that others are closer to the brink than they are. Instead of donating to charities and food banks, people are choosing to spend their money on those whom they’ve developed close personal relationships with.

Even though her fridge is already full, one lady faithfully spends close to $50.00 a week at a local ethnic market because she likes the family that owns it and knows that they’ve both taken on second jobs to stay in business. Another lady purchased breakfast at a local Starbucks three times a week, running up $80.00 in bills a month simply because she liked the barista. And, another pays $60.00 a month to have a gardener she’s known for 10 years mow her tiny lawn, even though she recently lost thousands of dollars in a personal business.

This handful of individuals might not reflect the entire U.S. but what these people realize is that their communities depend on small businesses (minus the lady that handed over her money to Starbucks) and they treasure the personal interactions that have been cultivated. Behind someone providing a service is a human being and most customers appreciate that more so versus the drone of a faceless corporation.

Our budgets now don’t just reflect the needs of ourselves, but often the needs of others as well. Though, it should be noted that there is also a sense of self-interest that keeps people spending money on everyday luxuries. They know that if they (along with everyone else) stop handing over their money, these businesses might not survive the economic climate and be there to service them when things improve.

The companies and the customers they serve are even more dependent on each other right now. Of course, rationality and personal budgets need to stay in check, but if you have extra money, give some thought to where you’re spending it.

The six remaining Virgin Megastores in the U.S. including the Times Square location (probably the single highest volume music store in America) will be closing for good over the next few months, leaving 1,000 people unemployed.

At its peak in 2002, Virgin had 23 stores across the U.S. with $230 million in sales. Virgin’s billionaire founder, Richard Branson sold off the retail chain years ago and it is currently owned by a joint venture of real estate companies. Though CD sales are down (they fell by a staggering 20% between 2007 and 2008), the stores are being liquidated because their owners think that they can make way more money off of the sale of the property than CD sales.

And, what will be taking over the prime Times Square real estate? None other than the cheap chic apparel chain, Forever 21. The shuttering of these six stores really does signal the end of an era. The brick and mortar music retailers as we once knew them are nearly dead.

In an attempt to boost its lagging profits, Starbucks has developed an instant coffee called Via. According to the Starbucks press release, it is being touted as “a transformational instant coffee that replicates the body and flavor of Starbucks coffee in an instant form.” 

Via is supposed to recreate the Starbucks experience at home or on the go while costing slightly less than a Tall cup of their regular coffee. The company has high hopes for its launch since instant coffee represents 40 percent of all worldwide coffee sales (that translates to $17 billion dollars).

According to Starbucks, Via has been an idea that they’ve toyed with way before the current recession. “We have worked for nearly 20 years to develop an instant coffee that offers customers the quality and taste they expect from fresh-brewed Starbucks coffee, and a unique and convenient way for them to enjoy it,” said Starbucks’ Howard Schultz.

Starbucks may have a fantastic product on its hands, but they are overlooking one key principle: most of Starbucks’ die hard customers frequent its shops for the experience. Starbucks has done an amazing job of branding their stores and creating a warm, inviting atmosphere coupled with great customer service. The folks that frequent their shops love having the ability to customize their drinks in ridiculous ways. It remains to be seen if a packet of instant coffee can live up to the hype.

Conspicuous consumption has drifted away as consumers shift their incomes to necessities in these dreary economic times. Overall, U.S. retailers are reporting that January 2009 sales are down 9.5% when compared with the same period the year before.

All the same, it seems that we haven’t completely given up on shopping altogether. Forbes.com is reporting that there are 10 key stores that Americans can’t live without.

Notably, the list includes Urban Outfitters. For the most part, 20-something hipsters will find a way to shop no matter what and Urban has a unique edge by not mimicking every other mall chain store. Each location boasts a product mix that is often tailored towards regional trends. Sales have increased 22.8% over the last year.

On the luxury front, Hermes (where handbags can retail for upwards of $5,000) isn’t for everyone’s budget. Though to Hermes credit, it is known for quality, timeless designs. Many who can afford the price points would rather invest in one quality piece that will last for years instead of a handful of lower-priced, trendier items from brands like Coach (which is doing terribly).

On the electronics front, Amazon.com has held up well. The massive selection, free shipping and low prices have all contributed to its success. Amazon has prospered partly because they were smart in the beginning and built a sense of community with customer reviews and pushed the Site Recommendation Tool (which recommends items based on customer’s past purchases).

Other flourishing retailers include American Apparel (now the largest apparel manufacturer in the U.S.), Walmart and J. Crew (thanks to the free publicity via the Obamas).

The secret to these retailer’s continuing success relies heavily on differentiation, whether it be through service, product offerings, price points or ease of use. Additionally, many (namely Urban, American Apparel and Hermes) continue to offer items that consumers can’t get at every other chain store. Getting consumers to part with their hard earned money right now means offering a unique experience that they can’t get anywhere else.