Just when those of us who ran a tight ship made it through this recession, along came May and June’s numbers to send us back to the bad old days. While many of our poorly run and ethically challenged competitors were run out of business, we survived on just plain old repeat/referral business. We were feeling pretty good about ourselves for keeping our heads above water. What’s been happening in the last few months?
I actually predicted this about six months ago. As a person who reviews history, I had looked back at the Great Depression for insight. I remember my grandparents lived on a tight budget even though they were fairly well to do some 40 years after. They understood that spending on credit and living to the full extent or above their means was bankruptcy waiting to happen and vowed to never be put in that situation.
But there is one huge difference between then and now. In the old days, you had to have 20% down to buy your first home. Back then, getting your first home was a big, proud deal. The lenders would go overboard to make sure that their loans were safe because when they gave a loan they kept it and had to live with it. Today most bundle those sub-prime loans and sell them to unsuspecting buying groups. We lived in an era that gave easy credit to those without the history to deserve it. The end result was a generation given something they should not have and they quickly proved that point.
So how does the current economic nightmare correspond with the Great Depression? People back then learned their lessons and stopped buying extras. They paid off old debts and started to save again. The lesson of building good credit—not easy, free credit— was learned. That’s what I predicted and think is happening today. Those that made it through are taking a deep breath and have stopped spending.
Unfortunately we are in a business I call “semi-luxury.” While many homeowners would like new flooring, it’s not a necessity in most cases. So what do we do to create a drive for buyers who are tight-fisted?
You’ve noticed that credit lending is almost non-existent. Lenders who gave easy credit for decades have now made it impossible for our buyers to qualify. Then, those who do qualify are looking at unbelievable terms and penalties. So, don’t fight it. Use it to your advantage. Today, our buyers are mostly those who lived within their means and can afford to make a quality purchase.
You also may have noticed a lower sales volume but a higher dollar average for the sales we have. That tells me we need to reward them for what they have achieved. We need to give them a discount for paying cash without giving things away for free. That’s our market today.
I watch a great deal of old, western movies. In most films there is a scene where Indians were on the attack and the settlers headed west circled the Conestoga wagons to become a protected group by banding together. Let your deserving buyers circle the wagons. Let them know their achievements have put them in a group that deserves a bonus. Place it in your ads or simply offer it to them when they come in the store. Remind them that while others abused what was offered to them, they were wise and you can reward them for it. Let’s face it. Today’s shoppers have the funds or they wouldn’t be in your store. Give your credit card machine a break and circle the wagons.
Thanks for reading.