Wednesday, October 12, 2011

The Death of Qwikster

What will happen with Netflix?

Netflix announced yesterday the end of Qwikster. Many probably remember the great hullabaloo over Netflix’s decision to separate its DVD service from its streaming service, and of course the substantial price increase. Many Netflix subscribers were up in arms and some dropped their subscriptions. While Netflix had anticipated subscriber departures, the scope and anger of customer unhappiness was shocking. This was a poorly thought out plan. If Netflix had taken the time to ask me I would have been able to tell them that the current economy could not handle this type of revamping along with a substantial price increase. There would be a massive problems, and I’m not a business authority.

Having the ability to use common sense is important in the development of any business plan. Currently, the economy is not working well, the hiking of one’s pricing may not necessarily be a good idea, and this is common sense. In regards to the jewelry industry, pricing in a tough economy can be very important. A retailer has to find that happy medium between pricing so high it scares away customers and pricing so low you cannot afford to replace inventory. There are jewelers who use a system whereby they mark their jewelry up two or three times and then have a 50% off sale. Is this a good idea? Since the economy has had such prolonged downturns most consumers have become quite savvy and recognize a good value. Additionally, there are schools of thought that bargain hunters and super low price shopping do not necessarily make loyal customers. These bargain hunters find items for the best price and this is their only concern. They will not return for another purchase unless the next item is priced similarly low, thereby creating a perpetuating downward spiral in store pricing.

A good example of the ultimate bargain hunter is a reality show called “Extreme Couponing.” This show depicts people who spend hours acquiring coupons and matching store sales. They then descend upon a store and clear shelves, stock up and check out with hundreds of dollars of item for which they only paid a few dollars. For these people it is all about the hunt. I’ve noticed that many have purchased huge stocks of items. These are items I would never use and getting it for free does not make it attractive. After all, where do you store 50 boxes of diapers until you have a child to use them on? Although a few of these shoppers do donate their bounty to local charities which is a good thing. I am also sure that most of these stores are glad that all their customers do not shop in this manner. These stores could end up in bankruptcy if everyone was an extreme couponer.

That is why I try and mark my prices fairly. I don’t try and make a killing off of each customer. I try and provide good quality jewelry at fair prices. I do not want to end up like a local mall jewelry store that shall remain nameless. This store provided huge discounts on their jewelry at the beginning of the recession, selling below cost in some instances. While this initially got customers through the door, it created a vicious cycle where the remaining jewelry in stock would have to be sold at a higher price. This would put any business owner in a bad situation. I walked past this store yesterday while running an errand at the mall. They did not have one single customer in their store. Now that they’ve been forced to stabilize their pricing to coincide with actual cost, there are few buyers. This is a lesson for the rest of us, a sale is good once in awhile, but don’t give it away and when the economy gets tough, think about what’s fair.

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