Ultra-luxe companies like Coach and LVMH Moét Hennessy Louis Vuitton are reporting strong 2006 sales. But in the mass-market luxury arena, disappointing earnings from upscale companies like Chinese eatery P.F. Chang's China Bistro and natural grocer Whole Foods may indicate that middle-class consumers who have been trading up are starting to trade down to more affordable purchases. "Consumers in general are becoming more cautious with their everyday spending," says Ken Goldstein, an economist with The Conference Board, a business research and membership organization.
So if you're a retailer targeting middle class shoppers, how can you preserve sales? Retail expert George Whalin, author of Retail Success: Increase Sales, Maximize Profits and Wow Your Customers in the Most Competitive Marketplace in History, says not to fret--there's still growth within the retail sector. As middle-class consumers cut back, Whalin advises you to:
- Get information. Capture everything from names and e-mail addresses to customer preferences, and use technology to house and apply this information. Whalin says this is where some bigger retailers fall down, and the personal touch of sending a communication that relates to your customers' preferences can preserve and increase sales.
- Host special events. Events can generate traffic, but think new and exciting, says Whalin. Local or national celebrity appearances, book signings or visits from designers or artists give busy customers a can't miss incentive to visit your location.
- Avoid downscaling. Offering less expensive goods can backfire. "You don't want to offer cheaper goods that make people think 'junk,'" warns Whalin. "Stay true to yourself and work harder to get the kinds of customers who want what you offer."