Retailers need to be careful about disrupting consumers’ “don’t move my cheese” mentality. Hobby Lobby has cultivated a strong following of customers that expect the 40% off coupons and even if average prices are just as low, taking away a benefit that they expected and valued is a very risky marketing strategy. Another option Hobby Lobby might have tried was to limit the coupons to one per month per customer or some other less frequent cadence to limit the exposure of the discounts. Stopping it abruptly is maybe not the best approach.

Ah, just when I wanted a discount on some Iraqi artifacts….

But seriously, this kind of transition is always difficult and if not handled correctly, causes resentment and defections. The crafting space is competitive and one of the issues with mainstream stores — including Hobby Lobby, Michaels, etc. — is that they are not always competitive with online, especially for those buying in bulk. Hobby Lobby may be trying to remedy this by reducing coupons and investing more in EDLP but even if that’s the case, it will take time to reeducate the consumer.

While a Big Bang rollout of new promotional strategy is fraught with risk, the comparisons with J.C. Penney are superficial. Netflix separating the DVD rental was way ahead of time and it generated even bigger backlash.

But the reality is, JCP is a more generic retailer with not much differentiation from other departmental stores in terms of product assortment, brand equity, merchandising, or strength of private label. It was reliant on the brands it carries, as any retailers are.

Compared to that, Hobby Lobby has stronger brand — (known for its conservative, Christian leanings), unique categories and a relatively niche space and a leadership position.

Even then, I think Hobby Lobby could have much easier time scaling back slowly. But it is equally possible that the execution would have faltered. Overall I have a feeling HL would pull this off successfully.

Uhhmmm … we’ve seen this movie before. And it was not suitable for any kind of sequel. Apparently customers have no benchmark for evaluating “value” in the absence of a coupon or % savings of some kind.

But wait … they do! Costco. Walmart. It’s a function of training and perception and expectations over the long haul.

So the good way to make this kind of conversion? Slowly. Evolutionary, not revolutionary. Bed, Bath and Beyond stuck with abundant coupons and now seems to be doing very well a year after a new CEO came in. He kept the comfortable and dealt with the content issues.

I actually support the idea of getting rid of false comparative prices … prices that are merely placeholders to set up the appearance of savings. But it’s a lot more complicated than just issuing a press release. And their timing would have benefitted from a little pressure testing.

My partner Rich Kizer and I have been a part of the creative industries since the ’80s, having consistently worked with retailers, speaking at trade shows, and sitting on the association’s board of directors. This is a question that has come up many, many times over the years. The catalyst is Michaels – the 40 percent off coupon is its creation. Some industry retailers followed and others did not. Still more, who had accepted Michaels coupons, stopped taking them. There was unhappy customer talk for a while, but it didn’t last long. You have to understand that the 40 percent coupon discount is good only for regular priced items and non-sale items are hard to find in all big box craft stores these days. The consumer’s comment “Just about everything in your store is way overpriced. The only time I buy something there is with a 40 percent off because then I can get it for marginally less than what I get it for elsewhere.” doesn’t exactly ring true. More often than not, Hobby Lobby… Read more »

Promotions are addictive. Once a consumer is used to getting them, they’re expected and triggering a sale without them is incredibly challenging. All this creates a vicious cycle. Weaning your consumer base off promotions is typically the right answer in theory. But in practice, the execution matters so much more to avoid a shock to the system. Retailers have to slowly unravel the bandage rather than rip off the band aid all at once.

The best approach is to start by removing those promotions that just don’t work against their objective (whether it be traffic, basket or something else). Then start by peeling back strategies that create excessive depth — such as stacking, followed by decreasing depth and frequency across the board. For each move, keep line-of-sight into performance of these promotions through analytics and KPI tracking. In parallel, retailers should start fresh to create their promotion playbook.

For as much as 2020 has shown that consumers can adapt to different modes of shopping, general consumer behavior does not lend itself to change when there is no perceived benefit or requirement. By using heavy couponing in the past, and to some success, Hobby Lobby effectively gained a lot of customers and established the use of those coupons as part of their shopping expectations. Now, by trying to shift away from them, and doing it abruptly, the promise of everyday low pricing will not be enough to immediately convince fickle customer that they’ll save as much money.

As David Naumann highlighted, these types of transitions are best handled over a period of time. In addition to his idea about limiting the coupon usage, Hobby Lobby could use this transition as an opportunity to introduce a loyalty program whose top tier members could still use the coupons, and then gradually shift them towards other benefits.

No.

Let’s see … HL taught its best customers to come and buy and get 40% off. Now it is saying to its best customers we got a better deal for you … no more 40% off. Really?

The overall reasoning makes sense, but customers will not see it this way without a lot of guidance. It’s up to Hobby Lobby to help customers see it as a benefit for it to succeed.

The thing that gets lost here is that coupons are a remedy for prices that are too high to start with. EDLP is a strategy only if your prices are actually “low.” When customers start comparing prices online from Michael’s and Walmart, they may shift their loyalty.

I do admire the Hobby Lobby operation. Closing out of the constant 40% program is a big move, and one I agree with. Certainly we will see some other type of loyalty program blossoming in the store, perhaps a customer loyalty reward program that will feature some types of rotating discounts, free classes and perhaps closed event classes on new projects just hitting the market. As to the comparison with Penney, Hobby Lobby always triggers the mind with new projects and products, every visit will offer something new; while Penney adventures became a trip to basics land. Big difference.

The fundamental question is what happens when you take away a recurring high-value promotion that’s not good on many products, if I’m reading the comments above correctly. If it’s not good on many products, because they’ve already been discounted, it begs the question of whether you’re losing much with it (compared to how much extra stuff coupon users buy). As George noted: the key question may be whether they’ve tested it or not. We all have data that says don’t do it, but we don’t know if that data is applicable.

Anytime a retailer focuses solely on major discounts to draw in customers, there will always be trouble ahead. Bed Bath and Beyond are experiencing this hurt as they continue to roll out their 20% coupons. Consumers rely on these discounts to purchase and become “conditioned” to buy only when presented with one. The same is true for The Gap and Banana Republic. They have all trained their customers to wait to purchase until the big 50% off sale. It’s challenging to take these discounts away from the consumer, just like taking a bone from a dog. However, the big question remains, how do retailers transition and get their customers off this addiction? If you look closely at what Mark Triton is doing with BB&Y, you will see that many of the 20% coupons now apply to curbside pickup only. This is a unique way to get loyal customers to get adopt a new process. It also saves the company time and money in the long run as customers shop online, eventually lessening the need for… Read more »

This is a big mistake. When I read this two examples came to mind quickly. Penney’s and Mens Wearhouse.
If they want to get their customers off of coupons, it will need to be a very slow weening process.

What a smart idea — NOT. Does Hobby Lobby really think their customers believe they’re losing money with 40% off couponing?

I think you have to wean off the promotions slowly, start with enforcing coupon expiration dates in all channels, then shortening the expiration date and decreasing the frequency, meanwhile do your marketing on everyday low price.

This is a poor decision, because of the decades that Hobby Lobby has used these to garner attention, develop customer loyalty, and position themselves in the multiple retail categories they compete. Yes, this is a mistake!