Price Wars

Being in retail, my ears perked up when I heard about the newest level of price wars between fast food giants McDonald's and Burger King. Last week Burger King announced a dramatic cut in the cost of it's Chicken Nuggets. Burger King is now offering a 10 piece chicken nugget for $1.49. This comes on the heels of McDonald's ultra popular Monopoly game, which has proven to be a traffic driver for the food mecca. So what does McDonald's do? McDonald's "sees" Burger King's $1.49 10 piece Nugget and "raises" with a $5.00 20 piece nugget, plus offers the fan favorite Monopoly game to boot.

What does all this mean?

It means that in the proverbial pie of fast food sales, there are only so many pieces. The loss leader in competitive sales has become an every day thing. So what does all this mean for a little guy like me? It means a heck of a lot and here's why:

• Retailers make 30% of annual revenues during the holiday season. WHAT THAT USED TO MEAN: Shoppers will shop. Period. WHAT THAT MEANS NOW: Retailers need to attract the customer. Even loyal customers.
• For most retailers, the Internet has changed the way we do business. Heck, the internet has changed the world but for retailers that means there is a World Wide Web of competition out there for goods. We must stay competitive to stay in the game. So how do we do that?
• Black Friday used to be the busiest shopping day of the year! Thanks to "Door Busters", Black Friday sales and deep discounts, retailers have to have a strategy to make their numbers and that spells out DISCOUNT. 
• More sales and discounts are a necessity and are now commonplace in a sales plan. And more frequently that ever before.  

It's amazing to me that even the big guys like McDonald's worry about market shares.I'm aware that they, of course, worry about staying on top and I know that we all worry about the bottom line, but I am surprised to find that the biggies and I share a common ground. It's the new age of competitive sales and in this Internet world, nothing is for sure. Service and reputation are a big part of it, but the facts are what they are. If you can't attract the client to your location or your website or your restaurant, you are all done.

The bottom line now means that they won't buy if they don't come. 

Buy-agra!

Tis the season....

So I'm watching Sunday Morning yesterday and they did this piece on buying on sale and what it does to your brain. Journalist Mark Elwood, who wrote the book, "Bargain Fever", says we are more conditioned to buying items on sale than we are at full price. Elwood noted when we are presented with a savings when making a purchase, our brains release a chemical that makes us feel good about buying and makes us come back for more. He stated that a decade ago, retailers sold between 15-20%  of their inventory at sale. Today that number is more like 40-45% and rising. 

The dopamine in my brain responded to this. Yes, I could completely relate. Not only do I love to get a bargain, but as a retailer myself, I see an increase in sales when I offer a discount at The Candy Bar. Since Black Friday, I have seen offers of 20-30% off flooding my email inbox daily. I even took advantage of these deals this morning when I shopped at Old Navy and Macy's online. I received 20 and 30% on both purchases AND free shipping! (which I couldn't take advantage of because I worried that they wouldn't be here in time for Xmas) Even during non-holiday times there are coupon sites you can use to apply discounts to your purchases online and we offer discount incentives multiple times throughout the year. It's a must to stay competitive in the retail world.

It really is BUY-agra!  And I'm not calling my physician if the sensation lasts for more than 4 hours either! 

So what does this say about brick and mortar competing with online shopping sites? The jury is still out on that one, but if Cyber Monday's sales totals this year say anything, (the largest online shopping day to date with over $2 BILLION recorded in sales) all signs point to easy access with the click of a mouse. 

It just confirms that an online presence for any retailer is as important as great products at a great value.

Tell me what you think?