Are Consumers “Cashing Out?”

1. Frugal

2. Buys online

3. Waits for sales

4. Price sensitive

5. Exhibits little brand or formal loyalty

6. Clips coupons

7. Saves money

8. Buys private label

9. Does research online

10. Trades down Both Ralph’s and Kroger have vigorous loyalty programs that give quarterly rebates and direct coupons based on previous purchases. Many consumer brands have printable coupons. Coupon usage has reached record levels. President Obama spoke about the economy yesterday stating that it was not where he wanted it to be. On the other hand if you provide stunning products (like the iPad and iPhone) or provide a service that people need (airlines are charging more per seat and charging more add-on fees) or want (Starbucks sold more Frap’s than ever before), coupons and sales are meaningless. When we look at retail sales in the salon/spa industry, we marveled in the good times that retail sales as a percentage of total sales were only 7%. Clearly, “cashing out” is not as prevalent in our industry as mass retail. Still, consumers are looking for value and deals. What I find amazing is the fact how many salons/spas buy goods on deal and don’t pass on the savings to their clients. Perhaps now is the time to take advantage of pricing, create in-store signage and see if there is an upturn in sales. One thing for certain is this: If you sell two bottles of “x” a week at $20 and pay $10, you make $20 a week. If you sell 6 bottles a week at $16 and still pay $10, you make $36 a week. It makes a difference. Happy Tuesday!