Say goodbye to your Christmas bonus
As the holidays approach, consumers will look forward to a season of sales at their favorite stores. Retailers, on the other hand, want to avoid offering discounts, selling more and more of their products at full price.
Reuters pooled research from PricewaterhouseCoopers and the marketing firm NPD that included consumer polls, market research, and information directly from retailers.
They found that while retailers have lost profits from offering too many discounts, 87 percent of consumers still plan to make their shopping decisions by price.
According to PricewaterhouseCoopers’ U.S. Retail and Consumer team leader, Steven Barr, the average American customer “has been permanently conditioned to expect significant discounts.”
Meanwhile, retailers want to rake in more profits by reducing sales. Teen apparel retailers Abercrombie & Fitch and Aeropostale were forced to discount many products last year when some of their fashions went rapidly out of style – a mistake they don’t intent to repeat.
High-end department store Nordstrom has publicly announced that it will offer sales on 20% fewer days this year than last year, and hope to reduce that number by 25% again during the 2016 holidays.
The early store gets the worm
Experts blame “Christmas Creep” on retailer’s desire to avoid offering discounts. The earlier a store puts out its holiday products, the more customers it can attract before the pressure is on to offer holiday sales.
That’s why you start seeing Christmas merchandise and decorations in stores earlier and earlier each year. This year, Wal-Mart is opening its holiday layaway program two weeks earlier than usual.
Retailers will try other strategies to convince customers to buy at full price, such as selling high-quality, trending products, and better inventory management to reduce the surplus that often ends up on the clearance rack.
It only takes one retailer to change the tide
Despite these strategies, however, it only takes one retailer to start offering holiday sales before the pressure is on for other stores to do so as well, if they want to stay competitive. Said Barr, “retailers can come to this season with strategies to not go promotional, but it only takes one or two to begin going promotional to disrupt their strategies.”
Many stores earn as much as one-third of their total yearly revenue in the months of November or December, so whether or not they are able to charge full price for their merchandize can potentially make or break the business. On the other hand, refusing to offer holiday discounts may alienate price-conscious customers.
What are your brand’s strategies for the holiday season?
