The Warc Blog

The Warc Blog

Let’s Make A Deal
Robert Passikoff, President, Brand Keys, Inc
Robert Passikoff
Retailers were encouraged by shopping increases this spring, but recent retail sales are down 1.4%. While that’s up from last year, consumer unemployment and small business credit concerns have cooled consumer spending. And while consumer confidence is weak, personal income and savings have increased suggesting to retailers that consumers need a little motivation, a raison d’être if you will, to open their wallets and spend more liberally.

So retailers are doing what they know best: promoting their own retail brands by offering promotions which they hope will get shoppers into the stores and reaching for their wallets. Some of the promotions are variations on long-established tactics. One is brand new.

On the everything-old-is-new-again side of the fence is Target, for example, is offering its credit card holders 5% discounts. Staples and Office Depot are reviving an adaptation of the “BOGO” –buy one, get one free (or in this case, gets something for a penny or a nickel) – by giving away items for a token payment or by rebating product costs via gift cards equal to consumer spend. Toys “R” Us is instituting a variation of the old “Christmas Club,” a holiday fund program where it will add 3% to shoppers’ October saving balances. Sam’s Club, looking to help their members get access to the money they need is introducing a brand new program: it will facilitate loans for shoppers of up to $25,000.00, backed by the Small Business Administration, hoping that a heap of that money will get spent at Sam’s or Wal-Mart.

There’s certainly no lack of creative “shells” with which to wrap tried-and-true promotional tactics, but retailers should keep in mind that consumers have morphed over the past couple of decades to become “smart shoppers,” and that situation is accompanied by a few realities retailers have to face.

First, just because you offer up promotions doesn’t mean that consumers won’t take what works for them and leave your revenues flat. Second, consumers have heard all this before. (OK, not the SBA loan, but pretty much all the rest which are just paraphrases of popular promotions.) To really engage them, to really engender positive behavior you need to be sure that they believe the retail brand can deliver on their expectations, even more so when it comes to saving money. So when smart shoppers want to make a deal, how do they rate the retailers on providing more than everyday values? For answers we turned to the Retail Section of our Customer Loyalty Engagement Index:

Discount Retailers:
1. Wal-Mart
2. Target
3. Kmart

Price Clubs:
1. Sam’s Club
2. Costco
3. BJ’s

Office Supplies:
1. Staples
2. Office Depot
3. Office Max

And, as Department Stores and Apparel Retailers are soon to follow, here’s how smart shoppers rate them when it come to offering up real and engaging values:

Department Stores:
1. Kohl’s / TJ Maxx
2. Marshall’s
3. Macy’s
4. Sears
5. Dillard’s / JC Penney

Apparel Retailers:
1. GAP
2. Victoria’s Secret
3. H&M
4. Old Navy
5. A&F

Over the next few months we’ll see which deals work best – for retailers and consumers. But there is one final reality which comes into play today: shoppers have been taught by the retailers themselves that often the greatest rate of return they can earn is on their own personal spending. And that being a smart shopper is the first step to really saving money.

Subjects: Consumers, Brands, Marketing

06 July 2010 21:24

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