I recently read an article on the JC Penney troubles in the past year when the new CEO decided to stop constantly doing sales for a “lower price everyday” model which I happen to like and what we subscribe to here at Corporate Casuals. Side-note: I think the reason it works for us is we are truly cheaper because we have lower costs by producing everything ourselves (and technology to do that quickly) and our customers are usually purchasing for an event which may not coincide with a sale of ours.
Anyway, I just chuckled at how sale obsessed the american consumer has become, and has been for decades. I remember when my father opened a retail sports store in our hometown of Rumson,NJ. It was called ABC Sports after our initials. He used to tell me that customers in a very affluent town outside New York would come in to purchase a $2 can of tennis balls and then comment how they could buy them 20 minutes away for 25 cents less. Why would you ever drive 20 minutes away to save 25 cents….although with inflation i’m sure that 25 cents is now $2 but you get my point. Consumers have turned shopping into a competitive event. They have lost sight of true value. Chris, our technical engineer here, would say that’s why China is in business and why most products are practically disposable. They’re made so cheaply that they don’t last just to serve the american consumer who wants cheap, cheap, cheap!! And that’s partly why the JC Penney experiment didn’t work. The second reason is these sales have turned shopping into entertainment itself. The competition of finding the best deal is half (or sometimes all) the reason people buy it. Do you think anyone at a christmas tree shop has a shopping list for necessities? No way. They typically buy these trinkets because they like it but mostly because its such a great deal.
I remember when we took over The Nature Conservancy’s merchandise program. They had lost $300K the prior year trying to run it themselves and we proposed a no inventory solution. As part of it, we took possession of the past stock they were paying to have sit in a warehouse. I suggested that we sell it all for $3-$10 as a fire sale at their world headquarters in Washington, DC. We left it in the boxes and just cut off the tops. We crudely (and intentionally) wrote the prices on cardboard in black majic marker. This substanndard merchandise sold out in a few hours. We had a 20 person line at the check out at one point and the average sale was over $100….which i bet was 3X what the average sale would be if we sold them for a regular price. The Nature Conservancy lost money on this sale but at least they got some money, the employees were thrilled and they didn’t have to pay to store them at a fulfillment house.
Obviously, the rise of the daily deal site like Groupon have fostered that game online in a unique way but honestly when will it stop? When will the products become so cheap that folks wise up and decide to pay a little more for better quality? When will folks stop buying items they don’t need or sometimes even want just because they were cheap? I think its terrible but also see a great opportunity to sell at a cheaper price and create that hysteria to sell products. I hate that i have to think this way.