Thursday, June 16, 2011

Be conscious of the prices you set. Don’t Discount.

We live in an age of discounts. There are herds of people who call themselves thrifty and wait until things go on sale. Thrifty does exist, but a majority – if not all of the things we buy discounted are cheap. And this is ok for many of us, we expect inexpensive things to fall victim to holes, or inefficiencies – but it was cheap so we buy a new one.

This is one big problem. Our society is causing the the destruction of small businesses in the pursuit of bigger mega conglomerates like Wal-Mart or Target. Cheap is best we say. Here’s why we don’t win with lower discounted prices.

Wal-Mart currently employs 2.1 million people worldwide, and that’s not even mentioning the people who rely indirectly on Wal-Mart – like the manufactures. That’s nearly 2.1 million people who make minimum wage and/or just above it. These people have no where to shop other than Wal-Mart. The manufacturers that rely on Wal-Mart pay less than $4 a day to their employees. Wal-Mart is directly responsible for putting millions of people into poverty. Now lets see how in the 2008 recession – Wal-Mart won. Emek Basker found that for every 1 percent decrease in personal disposable income, Wal-Mart revenues increased by 0.5 percent. During the recession Wal-Mart announced a 6.1 percent rise in sales.  

Because of our societal tendency to buy the cheap, we love Wal-Mart for what they offer, but they are actually destroying expertise. We’re losing small-business expertise because it is impossible to compete with those deep discounts. We’re trading in expensive well-made expertise for highly discounted junk.

And the worst part is. Only about 1-2 percent of items that the public knows the prices of are discounted heavily. 1/3rd of the stock Wal-Mart carries is higher than average prices. And the average savings on the rest of the stock is 37 cents. With 1/3rd of those items carrying a savings of no more than 2 cents.

Here is the distinction I want to make. If your a small business – recognize your expertise. Own it and position yourself this way. Use your superior customer service skills to get ahead. Don’t discount it. High quality services and products are rarely discounted – so show people that you are in a different league. Do not try and compete with Wal-Mart’s low rates.

As a small business you need ways to promote yourself in your local community. All it takes is a little experimentation.