Holiday-style promotions become a year-round affair
Justine Griffin/Sarasota Herald-Tribune
Following a relatively flat 2012 holiday shopping season, retail chains are extending holiday-time promotions to spur sales, touching off what analysts say will be an unpredictable spending climate throughout this year.
In many cases, the tactics this year are ones merchants kicked off in 2012, ranging from layaway plans to shipping convenience. And at least a few are being driven by technology that has increased consumer knowledge.
Most notably, big box chains are continuing to offer seasonal incentives — like price matching — to keep shoppers engaged and coming back.
Target, for instance, announced earlier this month that it intends to match prices online with competitors, such as Best Buy and Walmart, year-round.
Toys R Us, too, will honor coupons from competitors throughout 2013, and will continue to offer layaway services every day of this year to slake consumers’ desire to buy incrementally.
In both cases, it marks the first time the two retailers have extended price matching programs past the holiday season.
“Price matching helps build loyalty for a brand, and it is becoming a necessary evil,” said Jeff Green, a retail analyst with Phoenix-based Jeff Green Partners.
“If one competitor offers it, it leaves the others no choice, and as we saw, 2012 was all about getting a customer at any cost.”
Other analysts noted the gambits must be successful for merchants to continue them.
“Continuing programs like price matching is a sign to me that retailers sense shoppers are still reluctant to spend,” said John Fleming, spokesman for the Florida Retail Federation.
“But the fact that they are keeping these programs around means that they are working,” he adds. “They are helping them sell the merchandise.”
Shipping and trade-ins
In yet another incarnation of a merchant’s consumer-friendly tactics, electronics giant Best Buy experimented with same-day shipping during the 2012 holiday season, as did competitors Walmart and Amazon.
Best Buy also initiated a program where it shipped online orders directly to its stores to curtail consumer shipping costs. That program remains part of its sales effort today.
The retailer also is running a unique, January-long promotion where shoppers can trade in used electronics equipment — including laptops, cameras, tablets, phones and mp3 players — for Best Buy gift cards.
The promotion represents another way retailers are trying to lure customers after what was widely considered a lackluster holiday season, Green said.
“There is an uncertainty about what’s to come in 2013, and this is one way retailers are trying to spur sales early on,” Green said.
Holiday sales overall were up about 2.5 percent compared to the year prior, according to ShopperTrak, a firm that studies foot traffic data.
Traffic inside U.S. shopping malls and plazas, meanwhile, rose by the same percentage. Total spending reached $248.8 billion, ShopperTrak’s initial data showed, less than half the $586.1 billion the National Retail Federation predicted at the start of holiday shopping.
Retail sales have been down since the beginning of this year as well, according to the International Council of Shopping Centers, a trade group.
“The post-holiday blues kicked in over the last two weeks, as week-over-week sales slid with consumers having little reason to shop,” said Michael Niemira, ICSC’s chief economist.
But for the first time, analysts say consumer knowledge — the result of smartphone technology and ever more mobile devices — is affecting sales.
At local Sarasota Best Buy stores, managers say more customers than ever are entering stores already knowing what they want to buy, for how much, and whether competitors can beat that price.
“Retailers have trained customers to buy on sale through this cut-throat pricing strategies we see in retail,” Fleming said. “Efforts to win back some of that pricing power over the last couple of years has so far been unsuccessful.”
The result is more retailers offering more attractive discounts and incentives.
The return of layaway
To recapture some of that power, major retailers have resumed layaway plans that allow shoppers to buy often big-ticket items in small increments.
Analysts say the resurgence of the plans show that even in a moderately recovering economy, many consumers are either unable or unwilling to spend considerable amounts all at once.
Still others may continue to fear becoming enveloped in high-interest credit card debt, or they have excessive debt already, experts note. Walmart announced the return of its layaway program on Sept. 14 last year, a month earlier than it unveiled the year prior.
Despite its perceived popularity, however, the program will only apply to jewelry sales throughout 2013.
Sears, Kmart and Toys R Us have also revamped layaways, while Burlington Coat Factory, TJ Maxx, Marshalls and Hallmark gift stores have maintained similar programs year-round for some time.
Finding a niche
Specialty chains, especially fashion-oriented stores, have fared better than competitors reliant on typical Black Friday promotions.
American Eagle Outfitters, a mall-dominated apparel store, saw a 4 percent increase in sales in the fourth quarter of last year vs. 2011.
Although that growth may be modest, specialty retailers garner higher profit margins than chains that must invest considerably in doorbuster merchandise, Green said.
Express and Gap Inc. stores, meanwhile, offered holiday deals similar to those in recent years, including savings up to 60 percent off many items and incentives for signing up for store credit cards.
Neither offered price matching, layaway programs or shipping offers.
“There’s a definite difference between brand-drive products versus retailers that sell on factors like price,” Fleming said. “Shoppers are willing to pay a little more at a smaller store for that specific brand.”
As it always has, Bradenton-based Bealls stores extended its hours and offered shipping incentives to customers in the weeks leading up to Christmas, but the Bradenton-based chain re-adjusted prices and operations for 2013, said spokesman Bill Webster.
Even so, Bealls also is using technology and social media as never before.
Webster said this year customers can look forward to more online coupon offers and other deals.
For the first time in 2012, the chain pushed some Black Friday and Cyber Monday sales through social media.
But that does not mean Bealls’ sales suffered.
“The niche stores didn’t react to the earlier hours or price matching games like the big box stores did,” Green said. “They stuck to more traditional ways to make a profit, and are better off because of it.”