I had the pleasure of spending all of last week in our Bogota office. I love it – I love working with our team, I love the food scene in Bogota (that’s a whole other blog post…) the music, and this trip, the weather was amazing too.
Bogota is home to some fabulous fashion designers, whose boutiques I try to visit on each of my trips. Whether I get some EPK for my Daughters, (http://www.shopepk.com/), Mercedes Salazar for my lovely wife (http://www.mercedessalazar.com/) or Arturo Calle (http://www.arturocalle.com/ ) for me, as an American, I enjoy the exchange rate and load up on amazing products, at fantastic prices.
Last week was no different – I went to the famous El Retiro mall in Bogota to grab some holiday gifts, wanting to take advantage of the huge savings holiday sales would provide. The strengthening Dollar + Holiday Sales = Great value for cheap ol’ me.
Boy was I surprised.
The concept of “Holiday Sales” does not exist in Colombia. Not only were prices not marked down, in many cases, they were marked UP!
The malls were supremely festive, with entertainment for the whole family, and they were PACKED with people shopping for holiday presents, at full retail prices.
That shook my retail world. I have been working with retailers for over 14 years, and at Zemoga, we work with some of the largest retailers in the US of A. And to all, holiday sales are, well, a religion. The equation was always: Discount = Volume.
In Colombia, the model is different. It’s back to the basic rules of supply and demand. When demand is high, supply costs increase. No reason to lower it, and it becomes a “which retailer blinks first” – once price erosion begins, it sweeps the landscape. And the blinking in Colombia starts in January. AFTER the gift buying season ends, when the retailers have a good grasp on excess inventory. That’s when the real sales begin. Buying gifts comes with a premium, but for those looking for the opportunistic deals, January is the month to be in Bogota.
Why is the behavior so different stateside? It’s all about blinking. If one major retailer drops their prices in the quest for volume, all other retailers must follow, in order to stay competitive. In Colombia, retailers prefer margin vs. volume. Although I have to say, from the very unscientific observation of pedestrian bag toting traffic near the Andino and El Retiro malls in Colombia, volume ain’t suffering either.
Would Americans spend more, or less if there were no huge discounts during the holidays? Or have we been so trained to expect huge discounts that we would not exercise our divine right to shop? I don’t know the answers to that, but what I do know, is that I need to be back in Bogota. In January.