Not too long ago, I found myself in an indoor waterpark in the middle of America in the middle of winter.
Now I don’t find myself in said location all too often, so when I do, I tell myself to take full advantage.
As I’m standing in a heavily chlorine-scented line squinting at my surroundings waiting for the thrill of a self-imposed wedgie from going down slides (or most fun, flushing myself down the toilet bowl 🙂 ), it occurred to me that there was an awfully high lifeguard to scantily clad patron ratio.
So I started wondering – Are waterparks actually making any money with that level of staffing?
Turns out not really. At least not during the time I was there. Waterparks – even indoor waterparks follow a highly seasonal curve. Between high season and low season, they can fluctuate between an operating loss of $67M in Q1 to an operating profit of $247M in Q3 for a company like Cedar Fair, which owns 11 amusement parks and 7 water parks. During that low season, operating expenses are often 3 to 4 times greater than revenues.
So aside from then pondering why they bothered to stay open at a loss because I’m sure it wasn’t just to amuse yours truly, I started thinking about other similar products.
Luxury goods also follow the same demand curve. Products like jewellery (39% of sales come in the 4th quarter), cosmetics and fragrances (34%) — even consumer electronics (33%) typically make a disproportionate amount of their sales in the last quarter due to holiday gift giving (16% of consumer electronics sales are due to holiday gift giving). Profitability for an entire year can be based on how sales go in just one month (23% of jewellery sales happen in December alone). Tourism companies try to adjust demand by offering seasonal rates, and now it looks like luxury goods and services have an outlet too through flash sales sites like Gilt or Bloomspot. (though if it changes consumers overall to be super-price conscious remains to be seen.)
Some places, like Tofino, got creative by rebranding their wretched wet winter experience as “Storm watching season” (kudos on that, I was convinced to go :p).
What else can be done to promote luxury products outside of the traditional gift giving season? What would make you want to buy smelly toilette water in the dead of summer?
Unless it’s to drown out the sweet scent of chlorinated water in your hair —
Haha, maybe that’s it. Seasonal match made in heaven! :p
