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Retailers Pull Out All Stops to Motivate Reluctant Holiday Shoppers

HomeU.S.Retailers Pull Out All Stops to Motivate Reluctant Holiday Shoppers
Retailers Pull Out All Stops to Motivate Reluctant Holiday Shoppers

This holiday shopping season, retailers face a challenge: convincing consumers to open their wallets amid high inflation, rising interest rates and economic uncertainty. While total U.S. holiday sales are projected to grow a modest 3-4% according to National Retail Federation forecasts, shoppers so far have made fewer trips and delayed big-ticket purchases compared to last year.

“You’ve got to create that sense of urgency and desire to buy,” said Marshal Cohen, chief advisor for market research firm Circana. Early November data showed purchases declining 6-7% over 2021’s levels.

Facing this sales slowdown, retailers deploy discounts, events and incentives to ignite more vigorous holiday spending during lucrative moments like Black Friday weekend. They aim to hit the ‘buy button’ by manufacturing impulse.

Hooking Deal-Focused Shoppers

The dominant motif this season is shoppers waiting for the lowest price, whether for a new laptop or refrigerator. Retail executives point to sales surging during promotions, while activity between these sale events softens.

“Consumers are leaning heavily into promotional periods,” affirmed John Rainey, Walmart CFO last week. The world’s largest retailer saw lift once its Black Friday deals debuted despite October sluggishness.

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Steve Madden CEO Edward Rosenfeld agrees shopping has become “more event-driven” in 2022’s inflationary climate, admitting sales spike then fade depending on the presence or absence of deals.

To play into bargain hunting, Lowe’s and Best Buy have introduced lowest-price pledges and ramped up savings claims around appliances and electronics during peak holiday moments. Tempting shoppers when they feel likeliest to spend remains mission-critical.

“We expect shopping patterns concentrated around Black Friday week, Cyber Monday and the last two weeks of December,” said Best Buy CEO Corie Barry.

Driving Urgency Through Retail-tainment

Besides discounting, retailers deploy immersive experiences and impulse catalysts to captivate shoppers. Pop-up locations, short-term sales and festive flourishes aim to spark joy and spending despite tighter budgets.

Encouraging Spending Through On-Site Activities

Target’s free “Winter Wonderland” pop-ups in NYC, LA and Dallas showcase hot holiday toys with gift list scanning stations. Macy’s Herald Square location lets customers virtually model Disney Princess dresses through AR. All stores will also host weekend beauty bash events offering free consultations.

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“We want to bring that retail-tainment factor and create a bit of a party,” said Macy’s Chief Merchandising Officer Nata Dvir. Site traffic and sales lift when stores become showrooms.

Channeling FOMO With Limited Drops

Many chains introduce 24-48 hour deals on certain SKUs to breed urgency. Best Buy’s “Drops” last just hours with limited quantities. Ulta, Target and Sephora have seen traction via their daily “Deals of the Day.”

Exclusivity and scarcity pressures consumers to buy before the price jumps or items sell out. FOMO outweighs hesitations around overspending.

“You’ve got to get people off the fence,” Circana’s Cohen emphasized. “Otherwise they’ll wait and risk getting nothing.”

Seasonal Collections Spark Interest

Bloomingdale’s launched an eccentric Wonka-inspired range of purple apparel, novelty candy items and accessories playing off the upcoming film prequel. Disney shops at Nordstrom and JCPenney have $500 character styled handbags.

Novel, gift-ready assortments help brands stand out while brightening stores with holiday cheer. Even if large volumes don’t sell, unique products drive traffic and social shares.

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Converting Visits to Sales Still Difficult

Despite upbeat marketing, converting site visits and page views into transactions remains an uphill battle. Lower- and middle-income shoppers especially balk at non-essentials with credit card balances stretched thin.

Melissa Fleury, a deal-focused Brooklyn shopper, trimmed her holiday budget 25% to $800 maximum. Like many, she patiently tracks savings at Target and other go-to retailers using family tips. Impressing these cautious consumers hinges on conveying value.

“The price has to be right,” Fleury emphasized. Anything perceived as overpriced gets crossed off her list.

For the likes of Macy’s and Kohl’s watching margins shrink via heavy discounting, the question is whether all the fanfare and promotions can shore up bottom lines enough before year-end. Otherwise, 2023 forecasts look murky.

Convincing people to spend more than planned remains unlikely. But as Executives observe, galvanizing shoppers when deals hit could make or break holiday revenues. So retailers are doing everything possible this season to catalyze sales exactly then through creativity and incentives.

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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