We’re all feeling it. In general, nearly everyone I come into contact with is feeling the pinch of the slowing economy. It’s casting an oppressiveness over everything like a wet blanket.
In an article in USA Today this morning, the Federal Reserve’s new snapshot of nationwide economic conditions released today cited an economy that’s barely growing.
According to the article:
“Economic growth has slowed since the beginning of the year,” the Fed reported. Two-thirds of the Fed’s 12 regions cited softening or weakening in the pace of business activity, while the others referred to subdued, slow or modest growth,” the Fed said.
As I was driving down the street today, I was shocked at the number of sale signs in windows. A major high-end retailer posted a “first ever sale” sign in their window, another retailer had a “sale extended three more weeks” sign and nearly every store offering some type of deal.
I also received a mailer from Coach the other day offering “20% off everything in the store” for a specific time period. And it shows in their stock price COH which is down from a high of 50 in October to 20 today.
If Coach, the darling of Wall Street and on a growth terror in the mass luxury market over the past number of years is on sale, then you know the problems run deep.
THE REAL WORLD RETAILING TAKEAWAY
This is a tough one to offer insight on. Every retailer is different and most, if not all should be feeling the impact of the slowing economy to some degree.
So based on what you’re personally experiencing, you need to make the right decision for your business.
Analyze a few things in order to determine which way to go:
- Transaction count – are your customers shopping less compared to last year?
- Average transaction – are your customers spending less when they shop compared to a year ago?
- Double whammy – are your customers shopping less and spending less?
Based on what you’re experiencing, you most likely need to motivate them to come the store and spend more when they get there.
Here are a few things to contemplate:
- Offer a discount. I hate doing this. But tough times call for tough measures. Put a 20% coupon out there.
- Offer a Buy One, Get One at Half Off deal.
- Offer a Spend $50, get a gift card for $20 to spend next month.
You get the idea. Find a deal that’s enticing enough without breaking the bank. Start small and then grow the offer from there. It’s much harder to go backward if you offer the farm upfront.
Only you can decide to what degree you need to motivate your customers so they’ll make the trip to your store and then spend. But you need to get going. If you’ve seen your sales plummet over the past couple of months versus prior year, you have to act now. Allowing things to remain status quo will cause the slide in sales to have a cumulative impact, taking you, your business and everything else with it as it continues downward.