Uncertainty May Save Money

Craig Douglass On Consumers

Uncertainty May Save Money

“May God bless you!” That’s the last line in the refrain of the “Christmas is a-comin’ and the geese are getting fat …” carol. Guess it means if you can’t give — or buy, as consumers this time of year are wont to do — then bless your heart.

The holiday season is upon us, with retail promotions now starting well before Halloween. In marketing promotion lingo, this is called the pull factor. A “pull” selling strategy employs incremental spending on advertising and consumer promotion to increase demand for a product or brand, pulling the customer to the sale. And although some business consultants lament a current consumer confusion and lack of confidence — or, as AlixPartners calls it, “unprecedented uncertainty” — forecasts are still a bit bullish for seasonal spending. (Alix is a management consulting and strategic planning firm headquartered in New York.) Pulling in consumers early, and then using pricing and other consumer-benefit or “extras” strategies to keep the promotion fresh, creates momentum for an expanded season. It also actually benefits consumers. But more on that later.

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One way to project consumer attitudes and upcoming sales is to look at the casual dining industry, where more and more individuals and families choose to dine out during breakfast, lunch or dinner as a practice to aid in their never-ending search for convenience and effort to save time — you know, grabbing a bite between point A and point B during your busy day. It may be worth noting, then, that Nation’s Restaurant News recently published thoughts from the CEO of Darden Restaurants Inc., which operates well-known brands like Olive Garden, LongHorn Steakhouse and Cheddar’s. The take-away: “Uncertainty seems to be impacting consumer confidence and is pressuring brands to provide even more compelling guest experiences and hone value messaging.”

November and December retail sales are projected to climb, consumer confidence notwithstanding. In fact, Deloitte, the international business consultant, forecasts two-month holiday retail sales to increase as much as 5%. The increase, over the same period last year, Deloitte notes, is coming up against a U.S. government shutdown and declines in stock market indices during December 2018.

So the comps are coming off a “much lower base.” But 5% is 5%, and that equates to $149 billion in seasonal sales nationwide. As a subset of that increment, online sales are projected to chalk up a 14% to 18% increase.

Remember: Consumers continually look for convenience and time-savings. Add discounting, and if sales did not grow, a lack of confidence would be replaced by outright fear, and a total lack of economic backbone.

Retailers do have some promotional gizmos in the marketing tool kit to apply to consumer reticence — for example, the pull strategies we cited above. There are also push strategies. Effective push marketing incorporates the entire supply chain from manufacturer to wholesaler or distributor to retailer. Pull strategies include advertising and promoting consumer benefits. So do push strategies, using advertising and promotion to get the product or brand in front of the target consumer. Combine the two, and retailers have a powerful way to sell.

Walmart is one of the best examples. Its push strategy (“Save Money”) includes working with manufacturers to reduce the cost of manufacturing so that a portion of those savings can be passed along to the retailer, and so to the consumer. The retailer, though, must have significant distribution platforms to offer the kind of volume manufacturers will need to reduce cost. The Walmart pull strategy, on the other hand, includes convenience — in-store, online, pickup, delivery, etc. — along with saving money (“Live Better”).

Consumers ultimately benefit from retailers’ perception that sales may be soft, for whatever reason. If so, then retailers will start promoting early (they have), cutting prices (they’ve done that, too), and making it easier for the customer to purchase and receive the product (mobile ordering, free delivery, easy on-site pickup, etc.).

So let them think consumers are spooked. We’ll scare our way right into saving some money during this holiday shopping season.

Craig Douglass serves as executive director of the Regional Recycling & Waste Reduction District in Pulaski County. Email him at Craig@CraigDouglass.com.