Thursday January 12, 2006

Talk is Cheap, But Profitable, for Retailers

UD experts expect the discount segment to be the big winner in 2006 and economy will grow but not as quickly as it has recently.

Pop-up blockers may have met their match as online retailers are using an old-fashioned advertising tactic on the computer.

"It's the power of word-of-mouth advertising and it works," said Irene Dickey, a University of Dayton marketing lecturer who expects the phenomenon to continue to be a retail development in 2006. "e-Tailers use shopping sites, social-networking sites and blogs to connect with customers with similar interests."

Dickey said companies are benefiting because more consumers are connecting and communicating via new technologies.

"It's about getting your customers to talk about your products, not companies talking about their products," Dickey said. "A product recommendation from one blogger to another can be more effective than a traditional advertisement."

Dickey also anticipates there will be no slowdown on the discounting that reaped significant rewards for retailers during the 2005 holiday shopping season.

"Consumer shopping and product options continue to expand and information is more transparent," she said. "Comparison shopping is easier and the consumer is in control."

David Sauer, a UD associate finance professor, sees the aggressive discounting continuing as one way to combat the potential adverse effects of rising interest rates, energy costs and inflation.

"The economy will continue to grow but at a slower pace relative to 2005 and certainly not as fast as in the past because of those factors," Sauer said. "Discount retailers will fare better than mid-level retailers because relief from rising interest rates, energy costs and inflation keeps customers coming back to discount retail stores.

As for the Dow Jones hitting 11,000, Sauer said it isn't any sort of magic number, but it is significant in the sense that the economy and stock market are growing and doing well.

According to Sauer, some of the market's slowdown may be offset by expected increases in business spending.

For interviews, contact Shawn Robinson at (937) 229-3391 or Linda Robertson at (937) 229-3257.