503-785-3485
bill@conerlyconsulting.com
  • Facebook
  • Twitter
  • Linkedin
Conerly Consulting Conerly Consulting
  • Consulting
    • Approach/Philosophy
    • Sounding Board
    • Economics and Business Strategy
    • Assessment
    • Case Studies
    • Testimonials
  • Speaking
    • The Package
    • Topics
    • Testimonials
  • Writing
    • Businomics Newsletter
    • Businomics
    • The Flexible Stance
    • Blog
  • Industries
    • Banking/Finance
    • Manufacturing
    • Other Industries
  • Video
    • Speaking
    • Event Promotion
    • Business Planning
  • About
    • News Coverage
  • Contact
  • Consulting
    • Approach/Philosophy
    • Sounding Board
    • Economics and Business Strategy
    • Assessment
    • Case Studies
    • Testimonials
  • Speaking
    • The Package
    • Topics
    • Testimonials
  • Writing
    • Businomics Newsletter
    • Businomics
    • The Flexible Stance
    • Blog
  • Industries
    • Banking/Finance
    • Manufacturing
    • Other Industries
  • Video
    • Speaking
    • Event Promotion
    • Business Planning
  • About
    • News Coverage
  • Contact
  • Home
  • Business Strategy
  • Weak Consumer Sales: What To Do?

Business Strategy

31 Aug 2006

Weak Consumer Sales: What To Do?

  • By Bill Conerly
  • In Business Strategy, Economy

What can a retailer do about falling demand?  In yesterday’s post about restaurants I discussed possible causes of weak sales at restaurants.  The subject has become more interesting with some retailers announcing weakness, as Calculated Risk mentions on his blog.

The Wall Street Journal article about restaurants mentions coupon specials and value meals.  The economics behind this is “price discrimination.”  You try to find a mechanism that allows you to charge low prices to the people who are price sensitive, while charging high prices to those who are willing to pay more, if they have to.  Good example is airlines offering cheaper prices with weekend stays.  Business travelers are less price sensitive than leisure travelers, and the weekend stay is a crude way to separate the two groups.

For restaurants or retailers, it becomes harder.  I’m not very price sensitive, but I wouldn’t mind using a coupon.  And if I liked the item on the value meal list, I’d order it, even though I had walked in planning on spending more.  So shifting to value options risks losing revenue from higher spending customers.

The second risk, related to the first, is that some shoppers equate price with quality.  I know, it’s stupid, but surveys have shown that teenagers are apt to believe that things on sale are inferior.  (I’ve seen the ties on sale at Nordstrom’s, and I must admit they are the ugliest ties in the store.)

The final risk is upsetting the desired experience of the upscale client.  Once, while visiting Honolulu, I met my friend the distinguished economist David Ramsour.  I mentioned that the Royal Hawaiian Hotel had a high vacancy rate, and I wondered why they didn’t cut prices until they had filled up the hotel.  He remarked that the richest people in the world don’t want to stay in a hotel with people like me.  There’s some truth in that even in a mid-priced restaurant.  I don’t want to sit next to the Clampett’s when I’m eating out, and a restaurant that attracts too down-market a clientele may lose its high rollers.

However, the upside of value pricing is that the business’s pricing should reflect its customers situation.  If the number of low-spending customers is rising, and the number of high-spending customers is dropping, then it’s time to make some adjustments.  These changes, though should be fairly small.  If a Morton’s steakhouse tries to operate at the same price points as an Outback, it will lose its top customers without beating Outback, which really knows how to run a mid-priced restaurant chain.  However, trimming a couple of bucks off it the price of its lower-price fare, offering a less expensive wine or two, does make sense.

  • Share:
Bill Conerly

Search

Sign Up For Our Newsletter!

View Latest Issue

RSS Bill’s Forbes Articles

  • Inflation Has Not Shown Up Yet, But It’s Coming February 25, 2021
    Inflation is muted, but not for long. Inflation is coming in the next two years, then will be followed by a boom/bust business cycle, or maybe two.

Testimonials

Dr. Conerly’s presentation and view of the economic conditions impacting the world of business is insightful and thought-provoking. His analysis and presentation style is audience focused and engaging, leading to the efficient development of follow-up activities by those in attendance.
Paul Ulrich, The Inteplast Group (plastic bags)
Your talk and its message stuck with people.
David Crowell, after presentation to National Rural Electrical Cooperative Association
Bill Conerly has been an invaluable resource to our executive team and ownership by delivering superior, well-founded ideas that are critical to navigating the current economic climate within the construction industry. Bill assisted O.B. Williams Company with developing a strong business plan that we implemented 18 months ago. As a result and together with Bill, we are improving our position within our highly competitive market segment. We understand that navigating this current economy is indee…
David Wick, CEO, O.B. Williams Company
Bill did a great job. We look forward to a continuing relationship.
John Hamburger, Franchise Times
Bill assisted O.B. Williams Company with developing a strong business plan that we implemented 18 months ago. As a result and together with Bill, we are improving our position within our highly competitive market segment.
David Wick, CEO, O.B. Williams Company (wood products)
Your presentation was right on the mark. I received more positive comments about you than any other presenter. We would not hesitate to recommend you to others or have you back for an encore performance.
Bob Russell, Oregon Trucking Association
You made a complicated global picture understandable. I have received many favorable comments from those in attendance. I frequently heard comments like ‘Now I understand’ or ‘Wow, now I get it’ and ‘He was great to listen to. Thanks for bringing Bill to our meeting.’
Pete Van Sickle, Idaho Department of Lands
Every time you spoke, we got business.
Chris Rasmussen, Washington Trust Bank, Bank of the Northwest
We asked Bill Conerly to look at one of the major factors limiting the growth of our business. He pulled together data from a wide range of sources, as well as his own extensive business knowledge, to give us an insight into when conditions would improve and how we could be ready to capitalize on better times. He did so in a straight forward, easy to understand manner. A year later it was clear that things had evolved just as he had forecast. Ever since then he’s been my go-to guy on how the e…
Len Ludwig, former CEO, Vencore Capital LLC
As you know, it can be difficult to find economists who provide good substantive information who are so entertaining and engaging. I received many enthusiastic comments from members and others in attendance. I was very pleased with Dr. Conerly and have recommended him to NCSTAE, our national organization.
Molly Steckel, Idaho Telecom Alliance

Get in touch

(503) 785-3485

bill@conerlyconsulting.com

PO Box 2188
Lake Oswego, OR 97035

Useful Links

  • Consulting
  • Speaking
  • Videos
  • Blog
  • Press
  • Contact

Social Links

  • Facebook
  • Twitter
  • Linkedin

Newsletters

Copyright 2020 Conerly Consulting LLC