Retailers Starting After-Christmas Sales Now
By George Anderson
Merchants in the Pittsburgh, Pa. area concerned with being stuck with excess inventory at the end of the holiday season are beginning to advertise “after-Christmas” sale prices on a wide variety of items.
Retailers such as Dick’s Sporting Goods and Kaufman’s department stores are looking to drive traffic now with advertisements promoting discounts up to 60 percent on select items.
Edward J. Fox, director of the J.C. Penney Center for Retail Excellence at Southern Methodist University, told the Pittsburgh Post-Gazette, “It’s a signal to customers that these are the lowest prices and waiting any longer isn’t going to benefit them.”
While store traffic has begun to pick up in the run up to Christmas and many stores have expanded hours to accommodate procrastinators, there is still a sense among some that shoppers are willing to wait stores out in search of even better deals.
Bill Martin, co-founder of ShopperTrak, said, “Since many shoppers will also have the day after Christmas off, we expect to see sales on Dec. 26 out-perform those of 2004, adding another strong day to the holiday shopping calendar.”
Moderator’s Comment: Realistically, is there anything retailers can do to break consumers of waiting them out at the holidays for better pricing?
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George Anderson – Moderator
As a retailer purchaser of media and third-party marketing services, I’ve had many providers offer to defer billing until my next fiscal year. The appeal, of course, was to drive my fourth-quarter sales (where we’re most attentive) at no cost until my next accounting period. They knew that my kind of enterprise tried to cram as much business into the calendar year as possible.
Dick’s and Kaufman’s offering of post-holiday pricing during the holiday selling season uses the strategy mentioned above: Pay tomorrow for sales generated today. They are wagering their traditional, highly-discounted, first-quarter sales bumps against their holiday sales, and hope to make up for any drop in their normal January sales with transactions throughout the balance of ’06. It’s like taking the equity out of your home via low-interest refinancing today, and banking on positive equity growth in the future. Some call it “betting on the come.”
Attention retailers: You taught shoppers to wait you out at the holidays for better pricing. Is it important to you to teach them differently and, if so, how will you do it? Otherwise, you must lay in the bed you made.
What gets rewarded, gets done. It’s a common adage with employees, and it works well with customers, too. Why are retailers who have trained their customers how to behave surprised when they do as they are taught?
Michael Treacy and Frederic D. Wiersema in their book “The Discipline of Market Leaders” posit that every successful company focuses its efforts in one of three areas of excellence: best total cost; best total service; and best total solution. Therefore, retailers that excel in providing strong purchasing power to their customers will in fact train their customers to expect lower and lower prices (i.e. Wal-Mart). And companies that want to battle in this low price market will have to follow suit in order to compete.
Car companies have fallen into the “0% interest/employee pricing” model, and then act surprised when sales fall after these incentives are taken away. Many airlines wonder why they can’t raise their prices to cover their costs after spending nearly a decade whittling down their prices, while Southwest thrives with the best service/best solution option.
If a retailer wants to avoid the “lowest price” trap, they should redefine their value equation; otherwise quit complaining that your customers are doing exactly what you have taught them to do.
The idea that a large percentage of consumers are waiting until the last minute because they believe they will get a better price is nonsense. Consumers are doing their holiday shopping during the final week before Christmas because they lead busy lives, live paycheck-to-paycheck, hate holiday shopping, or simply don’t find it a priority until the last minute.
Retailers need to do a better job of creating compelling reasons for customers to shop in their stores before the holidays. There are already enough compelling reasons to get consumers into stores right after the holidays. After-Christmas sales before may bring some customers in, but there are lots of creative ways retailers can use holiday shopping events to attract customers to their stores before the holidays. And they aren’t all based on offering low prices!
While customers are likely to be pretty skeptical about the after-Christmas prices before Christmas, if the merchandise is gone after Christmas, customers will begin making those purchases whenever they figure the prices are as low as they will go before the stock is depleted.
It’s being advertised here in the Boston area. Many people I know are laughing at the ads. Sentiment is someone will always be lower on price and they’ll wait. Store closings after the holidays also drive price shopping with liquidation sales.
Well before Christmas Day, retailers could emphasize that the best assortment is found earliest. This would be a fantastic service for our industry if the NRF devised a slogan or campaign that all retailers could share and adopt. (Other industries, such as autos and liquor have adopted common slogans in their ads, such as “Don’t drink and drive” and “Always wear seat belts” and “Say it with flowers.”) Retailers can also run ads that clearly communicate future price intentions, such as “$14.99 now, $19.99 after December 27th.” JC Penney does the latter.
Early “after Christmas” sales are a great idea and will be a standard part of retailing in the future. As retailers seek any possible opportunity to increase sales prior to Christmas, we could easily see a final holiday push using these early, “after Christmas” sales. These only make sense, since they are an extension of Black Friday, and an early indicator of the after Christmas sales. It could very well be that we create a “White Saturday” for the last shopping weekend prior to Christmas, and retailers leverage this by starting many of their retail specials early.