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6.23.2010

Perpetual Mark Downs Give Way to Jealously Guarded Mark Downs?

One upon a time, if you were on the A list of a retail store, you would get a call or direct mail from your personal shop assistant or the store that said: we will be marking things down soon. Come before the feeding frenzy starts, take your pick and we will hold them for you until the actual mark downs hit the floor.

Now that we got rid of what felt like perpetual mark down mania in retail stores, some brands are REALLY trying to make mark downs special by reducing the privileges of the A list clients.

Twice this week, I have been told by my favourite haunts that "the mark downs start on 26 June and well, we are not allowed to hold things off the shop floor for you, but we can take notes on what you like and if they are still on the shop floor on the night of 25 June, we will call you and let you know."It must be the mark down system du jour.

But then again, maybe it is an Ashiya thing - Ashiya is one of Japan's top residential areas. The likes of Ichiro Suzuki of the Mariners have homes in my neighborhood as well as the bosses of the largest yakuza clan in Japan, the Yamaguchi Gumi. Where Ichiro has his home is called Rokurokuso, and if residents cannot afford the $5,000 per annum body corporate fees, you should not be a resident there. (I live in a different and less expensive part of Ashiya, in case you are wondering.)

I have noted that even in the lowest of the low times for the economy and employment outlook in Japan (we are not yet out of the woods, but there is a significant difference now thanks to many businesses doing better comps - of course, how could you do worse than last year, right?), the residents of Ashiya still drove around in their imported petrol consuming cars (none of that hybrid stuff the rest of the nation was rushing to trade down for) and wined and dined out. They were rebuilding or building anew homes, and perhaps the only retail store I saw move out of prime real estate was the fur shop, which moved to the newest commercial facility a couple of blocks down taking up a larger space.

Yes, quite a number of the "migrants" from Tokyo moved back to where they have their own houses, but this was probably a part of a nation-wide initiative on the part of their employers to cut back on housing allowance payments. As a result, the two neighboring units on either side of our humble abode are empty, but when I tried to get the landlord to lower the rent, he simply told me he did not need the money so if I don't like it, just move out. (Well, not in so many words, but...)

So, back to the mark down thing.

Yes, so A list clients can have their pick, but have to give priority to the unsuspecting consumers that may pay full price for the stuff they have their eyes on.

This maximizes the opportunity for the retailer to maximize its profit, so it is indeed logical. But who said consumers - and especially spoiled, A class consumers at that! - were logical?

They are buying things they don't need to begin with, so what makes the retailers think that not letting them whip out their plastic when the urge hits them, or failing that, appealing to their sense of loyalty in exchange for special treatment will have them come back to buy such things?

I guess the big bet was on the fact that they can buy it now at full price or risk not having it by waiting till it is marked down.

But we all have different trigger points - and being a proponent of flash sales, I am a big fan of appealing to the thrill of the chase, the sense of urgency, and the fear that the opportunity might slip by. But that has to all be done in prospect, and it is one thing to let consumers "think about it" for 20 minutes before an item disappears from their shopping cart; it is quite another when they are forced to go home empty handed and wait and see if (a) they still want the item(s) (there is no penalty for cancelling the merchandise); and (b) they still get to buy it. I think it is important to the consumer in this order, not the other way around. And the downside of the jealously guarded "wait and see" mark downs is that they are offering a helluva long "cooling off" period or time to realize that they don't need that item after all.

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