13456 Fri, 01/04/2008 - 3:31pm
By Barbara Thau
NEW YORK–Retailers may not have done as much business this holiday season as they had hoped, but what they did do was driven by a mix of unprecedented promotional stunts layered on top of the tried-and-true merchandising strategies of the past.
Merchants, operating against the backdrop of a tepid economy and the housing market slump, intensified their efforts to woo consumers with everything from 24-hour shopping days to widespread free-shipping offers, starting holiday promotions earlier than ever.
The season marked a major promotional revival for Wal-Mart and Macy’s, the nation’s biggest discounter and traditional department store, respectively.
Wal-Mart got out of the holiday starting gates earlier than ever this season by offering Black Friday prices online on Halloween. These “unbeatable savings” were then available in stores on Friday, Nov. 2—three weeks before the traditional kickoff to the holiday season on Thanksgiving weekend.
According to a Citigroup Report, Wal-Mart started the holiday season with 15,000 rollbacks in mid-October, a 20 percent increase from last year.
Wal-Mart then unleashed a maelstrom of weekly doorbuster sales.
The aggressive promotional stance reflected a move by the chain to regain its price leadership position after an ill-fated detour into higher-end—and higher-priced—territory.
Meanwhile, for the first time ever, Macy’s kept eight stores in New York City—including the Herald Square flagship—and New Jersey open around the clock from Dec. 20 to Dec. 23.
Kmart followed suit, kicking off its first-ever 64-hour shopping marathon in certain stores from Dec. 21 to Dec. 23.
Although Macy’s has been working to wean shoppers off the promotional needle in recent years by reducing coupons, the retailer reversed course, pulling out all the promotional stops this holiday, which marks a strategic shift.
“We [had] reduced promotions this past year and didn’t attract as many customers,” Macy’s spokesman Jim Sluzewski told HFN. Macy’s particularly alienated the former May shoppers acquired when the retailer purchased its longtime rival department store chain.
To that end, this season, Macy’s pumped up its promotional calendar of one-day markdowns and gift-giving sales. It ran newspaper ads nearly daily and broadcast both brand-driven and promotional television spots.
“A larger proportion of television ads were promotional this season” versus last season, Sluzewski said.
Home played a big role in Macy’s promotional story this holiday. “Everything from coffee makers to dinnerware and cookware was very well represented,” Sluzewski said.
The week before Christmas, Macy’s ran a storewide promotion that slashed merchandise prices from 25 percent to 50 percent. It then sweetened that offer with a coupon for 15 percent off.
J.C. Penney also flexed its promotional muscles as it extended store hours.
“Throughout the holiday season, we focused on the late rush with extended store hours, something that’s new,” Tim Lyons, a spokesman for J.C. Penney, told HFN. From Dec. 14 to Dec. 23, the retailer stayed open until midnight.
In addition to weekend and mid-week newspaper inserts pushing percent-off sales, J.C. Penney issued a 32-page holiday home sale catalog that offered price cuts ranging between 30 percent and 50 percent.
In addition to the standard doorbusters, there were Web busters, which were especially intense on Cyber Monday, the Monday after the Thanksgiving weekend.
This season, free shipping officially became de rigueur across retail channels.
Target.com offered free shipping on more than 25,000 home products, such as furniture, rugs, window coverings and lighting.
Crate & Barrel offered free shipping as a “gift” to its customers on select online and catalog purchases totaling $100 or more from Oct. 18 to Dec. 20.
Crate & Barrel rival Pottery Barn offered free shipping on 140 select items, such as holiday accessories.
According to the 2007 eHoliday Study conducted by BizRate Research for the National Retail Federation, the most popular shipping promotion this season was free shipping with conditions, which 78.6 percent of retailers offered this fourth quarter.
When retailers weren’t promoting specific merchandise, they were driving sales of their gift cards online and with full-page newspaper ads.
Retailers also pushed electronic gift cards.
Macy’s launched an electronic gift card this season that enabled gift givers to put their photo on the card.
Then there were the last-minute ploys when the promotions got fierce.
Two days before Christmas, Sears offered 50 percent off Kenmore cookware; Kohl’s offered 50 to 60 percent off home goods such as barware, dinnerware and flatware; and J.C. Penney cut prices on sheets and towels by 40 to 50 percent.