Monday, August 04, 2008

Sales signs everywhere

Over the week-end I went leisurely strolling around in a few of Chicago’s main shopping areas, from downtown to Lincoln Park to Lake View. I haven’t done this in quite a while, but I was able to make one interesting observation:

Every store has a sales sign at the front of its store, either in the window display ore on standing poles in front of the door or just anywhere where walking traffic could see it. The interesting fact is that there is no correlation between these sales signs and actual sales occurring in the stores. There is not even a meaningful connection between the size or the power of the traffic enticing message with the actual size of the sales (measured either in percentages of items on sale or the size of price reductions on a few items). In some of the store there we not even one single item on sale. After further reviewing the sales signs in front of the store I was able to decipher that the sales sign referred to an upcoming sales sign in a few weeks (e.g. Northface).

It shouldn’t surprise us that store managers are putting up sales signs to entice walking traffic to enter the store, especially in today’s times of a recession. I would love to see a research project that measures the impact of these sales signs on increased traffic (versus stores without a sales sign) and its impact on changed basket mix of consumers who enter a store with a sales sign (versus stores without a sales sign). I believe that for some stores the increased traffic due to sales sign is balanced out due to the negative impact of shopping basket value and margin. Consumers who enter a store with a sales sign expect to primarily buy items on sales and not regular priced items.

I think this could be a fascinating data capture and analytical project with clear implications of how to best use sales signs in trade areas with heavy walking traffic. Now I just have to find a retailer who would give green light to such a project…


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