While Czech exports have been growing beyond expectations in November 2011, internal demand took the opposite direction. Czechs were already buying less last year, and they will continue in this trend in 2012. For companies focused on the Czech market there is only one way to face this challenge: convince Czechs to buy more.
There are two ways to convince people to ease their purses: discounts – which have a sound tradition on the Czech market, but are also the safest road to hell – and an impeccable customer care. Such an approach can transform clients into valuable business partners despite economic downturns. Here are a few reasons why Czechs’ appetite to buy will continue to sink this year:
- State savings lead to people savings. The Czech government needs to put order in its messed-up figures. Unfortunately, the message it is sending translates into: “Citizens, we’re in trouble, so you better do the same.” Therefore, we can expect people to copy the government trend and save more. This is not good news for B2C companies.
- Rise in VAT. For the same reason as above, the Czech government needs to raise income, so it decided to pump up the lower VAT rate strating on January 1, 2012. This is automatically translated into daily purchases, which have a freezing impact on the purchase mood of customers. If people feel a stomach churn when they buy bread and yoghurt, they tend to be much more careful when buying goods and services that are only nice to have.
- Czechs are pessimistic. A recent study showed that, after the Greeks and the Portuguese, the Czechs are the most pessimistic population in the EU with regards to economic developments in 2012. When you face a negative mood in the society, the first thing you must do is to open up your customers, then trying to sell. Yet, this approach takes time and savvy customer care approaches.
- Buying from the neighbors. What do I do when I’m unhappy with the prices and quality of goods in Prague or other cities in the Czech Republic? I jump in a car and go do my shopping in Dresden or in other border cities with Germany, Poland or Austria, where goods are often cheaper and higher quality. When the price of gas for one return trip is amortized by the difference in the price of one simple shirt, why not going to buy from the neighbors?
- Rise of online shopping. Germany, Austria and Poland are not the only risks to Czech retailers. The Internet allows people to buy straight from the US or China. When price is an issue, why not spending a few hours on the Internet to go for the best value for money?
For all these reasons, companies focused on the Czech market must transform customer care into their mantra for 2012. Easy to say, harder to do. However, this situation offers a unique opportunity: to educate Czech customers on quality. Companies that will invest more this year into educating their customers why quality is important and how exactly their goods and services make a positive impact on their clients’ lives are the winners of tomorrow. Moreover, they make a huge service to the Czech market overall: opening customers’ eyes on quality and systematically teaching people why it’s better to buy something that is more expensive, but that will last longer and will have a positive impact on your life rather than go for nonsensical discounts in a chase for short-eyed gains is priceless.
