Stores want shoppers to forget sales, buy now
By Jayne O'Donnell
USA Today
They spent years drawing consumers into stores with highly publicized sales and markdowns. Now retailers and their vendors are struggling to convert sale shoppers to full-price buyers.
Retailer discounting went into overdrive in the late 1980s and 1990s with the emergence of Wal-Mart and Target and the growth of specialty retailers such as Ann Taylor and Talbots.
"Department stores would do the markdowns to draw people into stores, but now it feels like they're always having a one-day sale ... and it doesn't even feel special anymore," says retail analyst Christine Chen. Markdowns do "create traffic, but it trains the customer to expect the sale and not want to pay full price."
The industry has been working for years to snap people out of the sale mentality, says Madison Riley, former president of Stride Rite children's group who is now a retail strategist at Kurt Salmon Associates. "But now the competitive dynamics are so high, you have to do all you can to minimize markdowns."
How retailers push full price:
Lundgren says customers would revolt if his stores eliminated sales, but he's planning fewer and better ones. That has proved successful with high-end retailers such as Neiman Marcus and Nordstrom. Other retailers, including American Eagle, have shifted from mass coupon offers to targeting discounts to their most loyal customers.
Despite what some may think, industry officials say, they don't mark up merchandise with the idea that it will likely be sold at a discount.
Sullivan, whose company owns brands and stores including Juicy Couture and Sigrid Olsen, says retailers try to sell at least 60 percent of goods at full price. "We set the price at what the market will bear," she says.
Retail analyst Dana Telsey says that in the past few years, retailers have invested in systems that allow them to better manage their inventory levels. That way, "the items aren't out there for eight to 10 weeks," making people think it should be discounted. She notes that Abercrombie & Fitch changes its merchandise displays almost weekly, which helps get customers out of the "discounting mentality."
When merchandise doesn't sell, department stores will try to get apparel makers to help cover the cost of markdowns. This cuts into profits for both retailer and vendor and can devalue brands' images.
"The more full-price items a store has, the more profitable it can be," says Telsey of Telsey Advisory Group. "And guess what? It means shoppers like what they see because they'll pay full price."
For many people, a big part of the thrill of shopping is getting a bargain. And the industry is well aware that it created the situation. "There's no question we are programmed to search and hunt for bargains," says Riley.
