Saturday, April 30, 2011

Cycle the Merchandise by Paycheck Interval

MarketWatch reports that Walmart Stores, Inc. is finding time of month to be important. Shoppers go through many sorts of cycles each day, each week, each month, each year. It makes sense to cycle the merchandise to fit changing preferences.
     The type of cycle Walmart has noted is paycheck interval. Daily sales during the first few days of the month have been higher than daily sales during other days. Walmart attributes this to when paychecks are received. The implication: Feature the higher-priced merchandise at the start of each month.
     Before adapting this principle to your retailing business, consider a couple of points. First, your target demographic might be getting their paychecks weekly or biweekly rather than monthly. In fact, I suspect that the target demographic for Walmart does as well. Within the monthly cycle, there might very well be smaller bumps upwards at weekly intervals.
     The second point to consider is that Walmart depends strongly on an image of everyday low prices on all items. In fact, retailing experts say that Walmart initiatives to change that image have contributed to their numerous consecutive quarters of drop in same-store year-to-year domestic sales. Walmart had switched to strategies of rolling back prices on selected items and narrowing product assortments. They’re now switching back.
     The competitiveness of your business model may not depend that much on price. Do the paycheck cycles still make a difference in optimal merchandising techniques? Yes, but from a different angle. Research at University of Utah and University of Iowa finds that the effects are due to more than the consumer running out of money each interval. Paycheck cycles were found to affect not only how much money people will spend on merchandise, but also the types of merchandise they’ll find most attractive.
     In the days soon after receiving a paycheck, consumers with full-time jobs become more interested in products and services that help them gain more than what they currently have. This is a time for you to feature the latest technologies and the toothpaste which promises to whiten teeth.
     Then as the days after the paycheck pass, the person becomes progressively more interested in products and services which help them avoid losing what they have now. They'll become more interested in nostalgia items, familiar brands, and the cavity-fighter toothpaste. The researchers determined that this cycling was not principally due to cycles in consumers’ disposable income.

Click below for more:
Acknowledge the Power of Cycles
Merchandise to Fit Purchasing Cycles
Sell Either Protection or Promotion

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