Wednesday, August 22, 2012
Expect Paycheck Cycles Internationally
Now Walmart has announced sales at U.S. stores open at least one year rose 2.2% during this last calendar quarter, and The Wall Street Journal reports that Walmart is seeing the paycheck cycle at their stores in other countries as well, notably in the U.K.
Shoppers go through many sorts of cycles. It makes sense to cycle the merchandise to fit changing preferences. 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. Within the monthly cycle, there could very well be smaller bumps at weekly intervals.
The second point to consider is that Walmart depends strongly on an image of everyday low prices on all items. 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 will find most attractive.
In the days soon after receiving a paycheck, consumers with full-time jobs become very 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 pay greater attention to nostalgia items, familiar brands, and the cavity-fighter toothpaste.
The researchers determined that this cycling was not principally because of cycles in consumers’ disposable income.
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Cycle the Merchandise by Paycheck Interval
Posted by Bruce D. Sanders, Ph.D. at 9:00 AM