“New products” attract inflation-stricken buyers – Marketplace

The word of the day — at least in the corporate world — is “newness.” At Target's earnings call Wednesday morning, executives used it about a dozen times. Target said newness was a factor that led to a surge in apparel sales last quarter, and that the company will now offer everything from new stuffed animals to new doughnut holes. Sales rose 2% compared to the same quarter last year.

Why are shoppers willing to spend money on new things at a time when they are watching every dollar?

Shopping can be a chore, but the prospect of finding something new can make it more like a treasure hunt. “People think, 'Oh, this is exciting,'” says Jennifer Bartashus, an analyst at Bloomberg Intelligence.

She said new arrivals have become a focus for Target and the company is trying to give price-conscious shoppers more reasons to buy.

“Consumers have some kind of desire for something, whether it’s to reward themselves or to improve their lives in some way,” she said.

Last year's vacation in a new country turned into trying out a new type of shampoo this year.

Bartashus added that retailers are now better able to sell these new products to us online. “You get better results for what you're looking for, and you get better recommendations for things that you might also be interested in,” she said.

Novelty items can help consumers who may want a new shirt but don't need one feel less guilty about making a purchase, says Jennie Liu of Yale University's Center for Customer Insights.

“'I don't have this color, or I don't have this style, or this latest trend,'” she said.

People also like variations on a familiar theme — more than 80% of consumers collect things at some point in their lives, says Katie Thomas, director of the Kearney Consumer Institute.

So when Target releases a new Lego or a new type of candle, they'll get it before the store sells out.

“They're taking things off the shelf and putting them back on the shelf. They're not just adding something. And that taps into this idea that says, 'I'm going to find something that wasn't here before and won't always be here,'” she said.

One thing that is here to stay, at least in the short term, is the use of the word “news” in quarterly earnings calls.

Kate Suslava, an accounting professor at Bucknell University, said the concept is used by both financial services and retailers. She said it's a quick way to convey a positive idea.

“The word 'newness' makes you think as an investor: 'You are introducing something new. You are not relying on old products.'”

Suslava suggested that such terms could have a certain appeal – leaders listened to other leaders and then picked up on what they said.