Retailers’ Holiday Strategy Doesn’t Have to Be “Discount Everything”

Retailers’ Holiday Strategy Doesn’t Have to Be “Discount Everything

The final numbers are in for the 2016 Black Friday weekend, and the results appear strong. But there’s a surprising insight in the data released by the National Retail Federation: 36% of shoppers reported that all of their purchases were on sale; 11% made that claim in 2015. Analysts attribute this more than 300% increase to widespread discounting by retailers.

 

In what appears to be an increasingly healthy U.S. economy (4.9% unemployment rate, applications for unemployment at a 43-year lowmedian income on the rise), why are retailers choosing to battle it out on price?

 

I see a confluence of events behind this deflationary holiday season. While customers used to count on Black Friday for the lowest prices of the season, in recent years retailers have been advertising ”best deal” sales regularly throughout November and December. As a result, customers have been conditioned to expect discounts.

In addition to satisfying consumers’ discount desires, retailers have their own agenda to further lower prices. The tug-of-war continues between brick-and-mortar stores and online shopping, and both sides are slashing prices to sway customers (indeed, it seems that online sales may have won the Black Friday–Cyber Monday battle this year). And finally, with customers allocating more money for holiday purchases, retailers are cutting prices in the hopes that people will spend more.