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Consumers “Great Divide” Is Unfounded

11/16/2011

There is an alledged “Great Divide” among American consumers today. Those who are cutting back on buying milk and cereal and those who are buying helicopters. Those of that theory say Walmart is hurting and Saks is thriving.

I’m not buying into this theory.

First, the numbers don’t bear this concept out. Wal-Mart Stores Inc. reported net sales for the third quarter of fiscal year 2012 ended Oct. 31 of $109.5 billion, an increase of 8.2 percent from $101.2 billion last year. Saks’ 3Q sales were up 5.8 percent.

Second, the demand for basics – groceries, gasoline, clothing – things consumed by the alledged 99%’ers will never go away. Demand for civilian helicopters is up globally but only because changes in Chinese air space regulations have spurred growth among Chinese new wealthy.

The tactic used in the media to polarized the consumption behavior of the “1%’ers” versus the rest of the country is embarassing.

Consumers will buy when the product or the price is right. Most retailers default to the price side of that equation only. The perception that consumers are motivated by price alone is off target. When consumers are offered products they want, such as smartphones, tablets or e-readers, they respond by buying. When retailers serve up the same old stuff, 30% off sweaters or BOGO underwear, consumers yawn.

This is not rocket science, retailers! Give consumers product to be excited about and they’ll clear off your shelves.

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