Title

Stores prepare for year's most profitable day of the season, while consumers scope out savings

Authors

Kate Menzies

Document Type

Article

Publication Date

11-26-2014

Abstract

Stores prepare for year's most profitable day of the season, while consumers scope out savings

As holiday shoppers prepare for battle, retailers are arming stores and websites with amazing deals to lure traffic on days known as "Black Friday," "Small Business Saturday" and "Cyber Monday."

Mary Askim-Lovseth, of the University of North Dakota's Marketing Department, and Cullen Goenner, of the UND Economics Department, shared their thoughts on this year's holiday shopping season and shed light on how these promotions are beneficial for both retailers and consumers.

"These events are never going to go away," said Askim-Lovseth.

In fact, they are coming earlier every year. Dubbed "Christmas creep" by Askim-Lovseth, retailers are continuing to try to entice consumers to open up their wallets sooner each year. This way consumers can distribute their expenses over multiple months, instead of one.

"Consumers will always have a degree of price sensitivity around the holidays. Some consumers can't take that big of a hit on their wallets in one month," said Askim-Lovseth. "The more retailers can do to stretch out those expenses over several months, the more likely a consumer is to make a purchase."

As Christmas trees stand alongside pumpkins in the store aisles, one can't help but wonder if stores are taking these promotions to extreme levels.

But Askim-Lovseth and Goenner agree that it is just good business sense.

Retailers improve their margins and revenues and consumers ultimately get better deals.

While consumers mull over possible savings, retailers have to ensure savings of their own.

"Stores are starting to try to account for these promotions earlier and build it into their pricing strategies," said Goenner. "Retailers take advantage of these events to sell items at or below cost to lure in consumers, while hoping to make up the difference on other purchase items. Retailers use this time to get rid of unwanted or slow-moving inventory and also to test out the potential sales of new items."

Holiday shopping can be a stressful task for some, which is why days such as Black Friday are designed to help consumers get all their shopping done at one store, at one time. Of course retailers are not left high and dry. Thanksgiving weekend is the top weekend in sales for retailers.

This year promises to be no different.

The National Retail Federation forecasts holiday sales to increase 4.1 percent this season, as a result of holiday shoppers' increased spending power. Meanwhile, projected online sales are expected to grow by 8-11 percent.

With sales projections like these, retailers have a lot at stake. In order to grab their slice of the holiday pie, many companies are trying to adapt their strategies and marketing tactics to better fit consumer needs.

"Online shopping is one trend that retailers are beginning to take advantage of," said Goenner. "By having holiday sales online, retailers can take advantage of consumer convenience while offering a greater selection of items. Some retailers can use the savings on sales taxes to their advantage as well."

Retailers are no stranger to the aftermath of sales of this scale. Store aisles frequently resemble the scenes from a warzone, with items strewn about in every which way. By transitioning to an online format, retailers could potentially have fewer headaches to worry about.

Askim-Lovseth also predicts the addition of another designated shopping day.

"We have already seen retailers dip into Thanksgiving to start their sales. "It is only a matter of time before retailers create another holiday promotional event."

The economist and the marketer also agreed that these promotions have long-term effects. By offering sales on most items throughout the holidays, retailers are conditioning consumers to wait for sales when making purchases.

"Once you give something away at a reduced cost, it's hard to charge regular price again," said Askim-Lovseth.

"The consumer comes to always expect a sale," said Goenner. "When they don't see one, they are prepared to wait."

It is this psychological element of shopping that retailers are interested in understanding. The more they know about purchasing behavior, the better equipped they are to strategize and target consumers during these promotional holidays.

In a battle between savings and sales, retailers and consumers, who will come out on top this year? Only time will tell.

Kate Menzies University & Public Affairs student writer

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