With unemployment high and consumer confidence low, retailers are getting more creative to lure wary consumers. Grabbing shoppers from rivals is no easy task, but merchants are making a stab at innovative ways, beyond price cuts and low overhead, to lure consumers. Merchants have little choice now but to boost sales to keep profits up.
"Christmas in July" promotions are not a new retail concept, but stores and malls appear to be kicking it up a notch this year in order to spur sales in an otherwise sluggish time of the year. Retailers and mall operators are turning to "Christmas in July" events to provide an opportunity to offer sales that are "not simply a price promotion." Instead, these sales become more of a social event.
Tired of waiting for spending to rebound on its own, retailers are taking matters into their own hands. Stores like Sam’s Club, Target, Toys “R” Us, Staples and Office Depot are offering unconventional promotions meant not only to attract visitors to stores, but also to get them feeling profligate.
This fall, customers using Target-branded credit cards will a get 5 percent discount on every purchase at its stores. Gauging by the results of an eight-month test Target recently concluded in Kansas City, the company expects the program to drive a 1 percent to 2 percent nationwide increase in sales at stores open at least a year by luring shoppers to its stores more frequently to take advantage of the savings.
But now, Sam’s Club, Wal-Mart’s warehouse chain, is offering a program called eValues that strives to offer bargains tailored to each member, based on that member’s buying history. Industry experts said they expected other retailers to move toward more individualized offers, too. Today, most retailers offer across-the-board discounts or deals aimed at categories of customers.
Sears is offering military veterans a chance to own their own Sears Hometown Store through their Operation Stores and Stripes contest. The contest, which is sponsored in part by Maytag Appliances, will supply the winner with their very own Sears Hometown Store location and license, merchandise, renovation, the first 90 days of the lease as well as 90 days of operating cash flow up to $130,000.
Bass Pro Shops has implemented a Facebook tab for fans to buy gift cards that will be delivered via a text message or an e-mail. The digital messages can include personalized audio for purchasers with microphone functionality, as well as uploaded photos from Facebook. Recipients will see instructions for printing the gift cards, which can be redeemed online, via phone, or at the outdoors gear retailer's 56 locations. The browsing experience occurs within a pop-up shopping cart app without requiring users to navigate away from Facebook.
Victoria's Secret anticipates its inventory levels will be down in the low- to mid-single digits this quarter, and plans to throttle back on its discounting-based promotional activity, as it won’t need to clear merchandise out. As a result, the direct aspect of the company’s semiannual sale will be shortened by five days. Its retail element will not be affected during the semiannual sale, but its Memorial Day sale will be shorter and smaller. This doesn’t mean the company is pulling back on promotions, period. In fact, it's publishing a new catalog exclusively focusing on the Victoria’s Secret Pink line, which will be published to take advantage of back-to-school shopping.
Retailers are priming for a consumer comeback. Shoppers have started to show they're willing and able to spend more, and stores are tweaking their merchandise to accommodate them. Cashmere is making a comeback and sellers of everything from wine to toys are seeing shoppers move away from the very lowest price ranges. The moves signal optimism that the recovery from the Great Recession is picking up steam, but there's a downside for shoppers: the return of higher prices.