This morning, Lee Scott (CEO and President of WalMart) appeared on Meet the Press as part of a 5-person brain trust discussing the economy and where it’s headed. A comment he made really resonated with me; to paraphrase, when WalMart moms stop shopping for themselves--choosing instead to defer spending in lieu of their kids’ and spouse’s--it’s a sign of serious pull-back in the consumer market. As much as it pains me to say this, the leader of WalMart is dead-on-right.Each Christmas, we marveled in the store over the “one for them, one for me” pattern our female customers exhibited this time of year-—more than during other seasons, although not exclusive to fourth quarter. The better the economy, the higher the likelihood “one for me” cost more than the original gift. Even last year, as the economy was slowing down, we still saw self-gifting continue, albeit at slightly reduced price points.
Now, however, self-gifting deferral seems to be the rule. Even I, who typically splurges for a $300-ish technological gadget of some sort this time of year, succumbed, opting instead to pop for a $25 calculator.
(Yes, that’s just as pitiful as it sounds, but hey...the old one was losing some of its digits on display screen, which made it a necessity item.)
Was I disappointed? Nope. Didn’t occur to me to be. Which is exactly my point.
The fact that a calculator made me (almost) as happy as an Apple Time Capsule proves that I, too, am deferring self gratification in favor of splurging on my nieces and nephew. Doesn’t mean I don’t still want nice things...but does mean that whatever I buy myself will be a more affordable splurge than in days past. At least for now.
Revlon knows this, and provides a good model to follow. Whenever the economy goes south, they begin cranking out more dramatic colors in both lipstick and nail polish...then watch their sales spike. As money becomes tight, women tend not to spend on spa trips and new clothes, but still want to feel pampered, vibrant, confident, and attractive. Thus, the appearance of affordable fashion items...and dramatic nail polish and lipstick that make a statement.
Think I’m nuts? How many women have you seen sporting near-black nail polish on t.v. and in the halls lately? Point proven.
How’s this translate to gift retailers? Think like the WalMart mom or the 30-something woman sporting OPI’s “Black Cherry Chutney” nails. If it looks like a perk and it feels like a perk, then it is a perk that will be purchased...at under $20. Once the winter gift show circuit kicks in, items that replace more costly options in ways that improve the consumer’s lifestyle at a painless price point will be the hit that brings cash flow.
Given how late most retailers are pushing purchases right now, odds are good you’ll be buying for Valentine’s Day as well as Mother’s Day, graduation, and Father’s Day. Think: bold color, comfort, fashion, and experience-replacement purchases. Look for microwavable lavender neck wraps that will replace spa visits...for dramatic colors in scarves that will replace larger clothing purchases...and for high impact gifts that don’t need to be replaced (ie, refillable and reusable), then pair them with loyalty refill programs.
Don’t think this applies to higher priced boutiques? Guess again. Even luxury stores are choking as their previously cash-heavy customers pull back.
So how do you do this in an upscale environment? Here’s an example: Let’s say you currently sell $75-$100 cashmere scarves in a wide selection of colors. To tweak things a bit, consider paring down the color selection to black, white, red, and the top two or three colors seen in the current fashion magazines (so you don’t lose that particular customer), then add in a line of $35 or $40 silk scarves in twice as many colors. You’re still appealing to upscale customers while giving them high quality, fashion forward options that can be more easily justified.
If you can provide products that allow consumers to defer the more expensive alternatives by purchasing your current offerings instead, you’ll be ahead of the game. Give them options that are bold, confident, and affordable. If you don’t, well...they’ll look elsewhere. Remember, sacrifice eventually wears thin for most consumers.
Now...off to freshen up my “Eiffel for This Color” nails. They’re all the rage, you know.
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