Pricing

Social promotions such as those offered by deal-of-the-day website Groupon are wildly popular with shoppers, but they might not be as big a hit for businesses, according to a recent study by Rice University's Jesse H. Jones Graduate School of Business. Groupon promotions were profitable for 66 percent of the businesses surveyed for the study, but they were unprofitable for 32 percent. More than 40 percent of the respondents indicated they would not run such a promotion again.

Wal-Mart, the world’s largest retailer, is adding thousands of items to its shelves, including inexpensive ones, and is asking dollar-store suppliers to create small, under-a-dollar packages for its stores, too. In areas with high unemployment, Wal-Mart is grouping together its less than $1 items in a clear challenge to the dollar stores.

Posies Cafe signed up with Groupon several months ago. If Groupon could promise to deliver a certain minimum number of customers, Posies would sell them $13 worth of products for $6. Nearly 1,000 people bought the Groupon in the one day it was advertised, swamping the small coffee shop for three months. Posies' owner said that the volume of sales coupled with the steep discount threatened her business, forcing her to spend $8,000 of her personal savings to pay her employees and the rent.

Wal-Mart is experimenting with allowing customers to buy merchandise online and have it delivered free to urban FedEx locations, a bid to boost sales in big cities where the retailer has little to no store presence.

Men's Wearhouse is getting rid of its well-known branding ad campaign (think grey-bearded chairman George Zimmer extolling the virtues of quality and price, “I guarantee it”) in favor of “time-sensitive price promotions” to continue increasing market share.

Talbots said it returned to profitability in the second quarter, but sales fell because the company kept the line on prices to a large degree. While the recession has made it common to deeply discount, "We did not react to what became a very aggressive promotional environment," Chief Executive Trudy Sullivan said. Instead, Talbots went after margin growth — or getting the most return on the dollars it did take in — and continued to balance cost cutting with rebuilding efforts.

It's time to outfit the kiddies to go back to school and OfficeMax is partnering with Payless for a second year with a cross-promotion offering two of the essentials: school supplies and shoes.

What a difference a deal makes. Groupon launched its first nationwide deal, $25 off a $50 purchase at Gap. The promotion, which was available in every city, briefly crashed Groupon’s servers as deal-happy consumers clicked on the 50 percent discount and pinged their friends.

Target has come up with a promising comeback plan. Two bold initiatives now under way — rolling out fresh groceries in more of its stores and, starting this fall, offering 5 percent discounts on nearly all purchases made with Target REDcards — should help a lot.

Local shops nationwide are pulling in thousands of new customers with group coupons online, but the deals can sometimes work too well, turning marketing into a game of retail roulette.