Supposedly the main thing this economy is lacking is confidence, and that if only confidence were restored, everything would be OK again.
We think that’s nonsense, but obviously when consumers and businesses are nervous about future prospects, they’re likely to make more conservative investment and purchasing decisions.
Various companies have tried to remedy this, by offering “takeback” schemes, such as Hyundai’s offer to take back your car with no credit hit if you lose your job after purchasing it. Southwest has a scheme that lets you cancel your flight and get your money back.
A reader of Mark Cuban’s blog sent the Dallas Maverick’s owner what we think is a pretty ingenious way of inducing shoppers to make smaller purchase. The idea came from a high end T-Shirt retailer that had seen sales fall off a cliff starting last November:
I first lowered our prices from $110 to $55. This helped a little
bit, but people where still not buying like we saw earlier. So I came
up with a concept that at the time seemed bizarre, but now has proven
to be a saviour for us.
Now when a customer buys a shirt on our website (www.teesandtats.com),
they are told the price of the DOW. For every 100 points that the DOW
drops within two months after the time of purchase they receive $5
dollars off of their purchase. For example if a customer buys a shirt
for $55 dollars and the DOW is 8200 and two months later the DOW is
8000 – the customer gets a check in the mail for $10 dollars. The
reason why people aren’t buying high-end fashion- is that they are
nervous about affording food, rent and other necessary living
expenses. Obviously very understandable. So by assuring them that if
the economy deteriorates even more they would get some money back –
it made it very enticing for many customers. Our sales have been up
significantly since we started this. Read the whole thing >
We really like this idea of embedding a form of insurance in a purchase. In a way it almost makes it fun, as less market-exposed shoppers might root for the Dow to go down. We’re guessing that we’ll see more innovation along the lines of this and Hyundai as the recession persists.