Will Strong Holiday Retail Sales Mean Weak Profits? Shoppers Benefit From Deep Discounts. Top Line Statistics Are Exciting. Owners and Investors Pay The Price.

The four-day Thanksgiving holiday sales period for 2004 is over. Initial reports of traffic and same store sales volume statistics were very positive. Looking deeper, a different picture emerges. According to Steve Pohlit, President of Exec Net Consulting, Wal-Mart’s stock price declined the Monday after Thanksgiving. The reason cited by certain members of the press was lower sales than a number of it’s competitors. Wal-Mart acknowledged lower sales gains a result of not offering deep discounts on popular items which is attractive to the 6 AM day after Thanksgiving shopping crowd. Instead, the company was focused on profit performance. So the stock price gets hammered because the company is focused on profits. Why is that? While you are pondering that question, consider the longer-term profit outlook for retailers. Does the discounting strategy used to attract customers to a store actually achieve the intended result of customer loyalty and increased profit performance?

Largo, FL (PRWEB) December 2, 2004

With the extensive product pricing and content information available to consumers, the “bargain hunters” will find the best bargain. If the retailer’s practice of discount pricing does not carry over to add-on sales of normal margin products, the overall profits decline and the retailer ultimately is in trouble. The dominant retailer in the world is focused on profits. Steve Pohlit advises retailers to take note.

Lessons can be learned from the direct marketing experts. In summary, understand the lifetime value of a customer and use that as a guide in concluding on your marketing budget for acquiring a new customer. An ad in Thanksgiving’s newspaper promotes a hot item at near cost or possibly below cost. The item flies off the shelf. The buyers are predominantly bargain hunters and entrepreneurs who will later sell the item on an auction site. What is the lifetime value of those customers? Do you want those customers?

The end game has not changed. Companies need to earn a profit and grow profits. Sales line statistics without profit performance trends are great newspaper stories but are not indicators of growth in shareholder value. Steve Pohlit of Exec Net Consulting recommends companies look deep into their customer retention and development strategy. Chances are, it needs work.

About Exec Net Consulting:

Exec Net Consulting specializes in strengthening the process for achieving significantly higher profits including the development of high return on investment customer growth and retention programs. For more information, please visit http://www.ExecNetConsulting.com Stay current with the latest reports issued by Exec Net Consulting at http://buildcashproftis.blogspot.com

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