Monday, December 01, 2008
Finance says: Patronize your local bodega
This story is a little bit stale. As the stock market was crashing out in September, I noticed the proliferation of these two signs at bodegas and delis all over Brooklyn (represented above are stores in Bed-Stuy, East New York, and Crown Heights, but I've seen many more). The red ones have since been replaced, but with our economy officially in a recession I figured the larger theme remained interesting.
The signs convey the same basic message, one that shopkeepers have made use of for awhile: the simple "thank you, come again." They're obviously mass-produced, but how do local grocers acquire them? I asked around and found out that the green signs are provided by Chase, and the red ones by Western Union. However, they aren't just giveaways: Chase and Western Union purchase the space on walls and doors, and replace the signs at their leisure. The store owners get a monthly payment for renting the space.
So why would either Chase or Western Union post these signs in the space they paid for? At first glance, they seem to be doing the local shops a straight-up favor, though I've mulled over a few theories that might explain their largess. Neither agent brands their sign anywhere (I even examined a discarded one that was blowing across Tompkins Avenue one afternoon), so the goal isn't any direct connection between the observer and the provider of the sign
In Chase's case, they are the bank of each bodega I spoke with. Perhaps, then, they consider these signs a chance to protect their client, so as to make them more profitable, or better guarantee repayment of their loans, in the face of reticent recession shoppers. A wealth of research shows that saying "thank you" pays (this study suggested that waitresses who wrote "thank you" on checks received 11% more in tips, on average), so perhaps it's that simple, and the bank is taking the opportunity to say thank you on behalf of their customer businesses.
They could also be engaging in branding, a well-known profit enhancer. Delis are everywhere, and variously look more or less appetizing, but the presence of this sign might announce a certain standard to those who shop at a store with an identical green sign out front. By branding the stores they bank with, Chase could be creating a recognizable emblem that attracts shoppers moving from neighborhood to neighborhood.
We'd have to ask, though, whether either of these options are more profitable than advertising. After all, Western Union, who doesn't have any stake in most of these bodegas (none of the ones pictured above actually offer any Western Union services on site), has been putting up the same signs, and not just in NYC--I saw two in Chicago during a November visit. If Western Union is employing the tactics discussed above, it isn't to protect any investment, merely to keep shoppers walking past their signs. I highly doubt that increased traffic from either the "thank you" effect or the "branding" effect would be enough to make it worth their while to forgo a month's worth of ad revenues.
So perhaps the other force at work here is the aforementioned recession, particularly the short-term shocks of September and October. Advertising is essential to marketing your product or service, but marketing isn't necessary in the short term if you don't have anything new to offer and you're struggling to make payroll and loan payments. Perhaps the major reason we saw so many "thank you signs" in the past two months was because of the drop-off in advertising demand. Faced with lackluster interest, it makes sense that these companies would rather replace their previous advertisers (whose contracts had run out) with something than leave their ad space blank or unchanged. If you're looking for something to fill a space, then maybe the logic of branding or "thank you" applies.
But why didn't Chase or Western Union just run ads for their own services in their space? Have times been tough enough that even free space can't make new advertising worthwhile? Or is the "thank you" brand worth it? Maybe there is some staying power to these signs, after all--Chase's remain up after two months. Western Union, on the other hand, has replaced the red ones with an ad that offers help in quitting smoking.