Bad Economy? I’m Not So Sure
I visit many businesses during the "sales" part of my job. Many of them say "business is down because of the economy," So many people say that consumers aren't spending what they used to. This is partially correct.
According to an AP story on ABC, retail spending is down. But when I went driving around I noticed:
- On Thanksgiving evening (day before Black Friday), the parking lots were packed.
- Every Saturday the parking lots were packed.
- Christmas Eve, the same thing: the parking lots were packed.
Consumers today have been trained: wait for the sale. But too many retailers are not willing to mark down their goods. It's understandable. They want to make enough of of a profit to at least cover their costs. But unless you are an exclusive, high-end specialty store that caters to the affluent, you may not survive (as highlighted in this story last week on CBS' Sunday Morning).
Walmart's business model involves using "loss leaders" - items that are marked down, sometimes below their cost, in order to drive traffic. Even though Walmart is selling some items below cost, they are still making money.
I realize that it is hard for every retailer to create "loss leaders" in order to drive traffic. Many retailers have a small number of items to sell, thus, if they create one or two "loss leaders," they run the risk of people coming in to purchase only the "loss leader" items.
The point I am trying to make is that, in my opinion, people are still spending money. Even though I have less to spend, I really I haven't cut back on my spending. I am being very selective, as are most consumers, we are all being very selective on what we buy and where we buy. And if you don't have exactly what the consumer wants at the price the consumer thinks they should pay, your business may not survive.
So, as a business, instead of complaining about the economy, what are you doing to attract business?