Google+ Consumer Psyche: The blinking game

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Friday, February 6, 2009

The blinking game

The game is very simple. Who would blink first? The customer or the firm is the question.  If the time is the deciding factor the firm has to bow to the market conditions. After all we live in almost free competition where the buyer has almost equal control over the brand as the firm itself. 

The retail sector saw a disheartening December quarter, with a sharp deceleration in sales growth and a contraction in profits. Sales growth for the quarter slid to 15 per cent, from 65 and 61 per cent respectively in the preceding September and June quarters. Though sales did expand, net profits fell by more than half, after declining 15 per cent in September and growing 8 per cent in June.

Even as footfalls declined and retailers scaled-back expansion plans, same-store sales (sales in the stores that existed last year) succumbed to the slowdown. Retailers had to extend discount periods to draw consumers. So the firm is blinking first. The consumer has an upper hand here. Either the firm reduces the prices or withers out. It depends on how deep the firm's resources are and what choice it would make.

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