About 66% of the US Gross Domestic Product (GDP) is consumer spending. We Americans love to shop. We also love a bargain. When we first visited the UK decades ago, I felt I was seeing a country where a person bought another pair of pants when they needed to replace a pair they already owned. In the US, we consider shopping as a sport. We will buy another pair of jeans because the price is good. It doesn’t matter if we already own 15 pairs! I got a good price. Can this attitude help when it comes to doing business?
1. The thrill of discovery. Many people think they are great at finding bargains. They do online research. They can sniff out the sale racks in clothing stores. They feel they are spending their money wisely, compared to other friends who “pay retail.” You’ve heard the expression “Friends don’t let friends pay retail.”
Advisors: Your friend sees value in doing research beforehand to get the best value. This is part of what you do as an advisor.
2. The “go to” guy. Very often this applies to specialized categories. There is the friend who can negotiate the best price when buying a car. Another friend knows how to find the best wine deals. Another gets the best airfares. You have heard friends say: “If you want to find the best deals on wine, you need to talk with (name).”
Advisors: You want to be the “go to” person concerning investments. People might know where to get the “best price” but they don’t know what to buy. Also important, they don’t know when to sell either.
3. We equate bargains with value. You often don’t have a need that justifies your impulse purchase. You feel you are getting value. You justify the purchase afterwards. “He will love It!” “I’m buying this as a future holiday present.” Also, “This is going into the present closet.”
Advisors: Investing in stock often involves finding value before others jump on the bandwagon. That is a message the bargain hunting shopper will understand.
4. We assume things will be in short supply. It has been said Costco does not stock many non-food products in great supply. Why? Because they want you to see an item, like it and realize you need to buy now because it likely won’t be available on your next visit.
Advisors: The market is constantly in motion. This stock may be at a good price now, but it probably won’t stay low forever.
5. We want to tell our friends about our great deals. It is not enough to land the deal, we must tell others about our good fortune. We are helping them by sharing our discovery. They can take advantage too. We just got there first.
Advisors: Doesn’t that could a lot like a referral? The first person feels they got a good deal and they rush to tell someone else. The second person benefits, but the first was the source of the introduction. That doesn’t sound like a bad thing from the advisor’s point of view either.
6. We feel smarter. You invested the time and energy to find a good deal. You also pulled the trigger, acted and didn’t hesitate. As a result, you landed the deal. You were proactive and benefitted.
Advisors: Clients who take advice feel they took action and were part of the successful process. They feel smart because they followed advice.
7. Time is of the essence. Good deals don’t stay around forever. Ask anyone who has gone to a warehouse or clearance sale. You need to trust your instincts and act immediately.
Advisors: Many opportunities you put in front of clients have a “time sensitivity” aspect. If they are clearance sale shoppers, they know what that means.
8. Cheaper by the dozen. The early days of big box store shopping presented a paradox. The price on mustard was great, but the container held a ten-year supply. Later this transitioned into smaller sizes or multiple containers. The shopper could tell friends, buy in bulk and split the packages up.
Advisors: “Have a hunch, buy a bunch” is an expression often associated with the “Old School” habit of position building. Today you might say: “Who else do you know that might be interested in this idea…”
9. There is always a sale. Even when prices rise, supermarkets put out fliers touting weekly sales. Unfortunately, few people keep last year’s copies on hand to see howe much prices have actually risen. They promote the sale of the moment.
Advisors: The US stock market isn’t the only one in the world. The US stock market actually represents about 54% of the global stock market capitalization. The US markets might not be doing well at a given moment, but there may be a rally elsewhere.
10. Plan for the future. Why do we buy more pants than we need? Because we rationalize the ones we own will wear out, we will need to replace them and prices will be higher later.
Advisors: Planning for the future is an excellent reason to focus on retirement savings now. You know the need will arise later in life. It is best to start preparing now
We have all heard the expression “Retail therapy.” It’s another way of saying shopping can be fun, a welcome distraction. Investing can be pleasurable and enjoyable too.