Hooked on discounts

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Hooked on discounts
Hooked on discounts
Some see this as a welcome evolution, where retailers will have to find new ways to entice customers beyond e-mailing them an offer with low prices that can be easily matched. Merchants haven't done themselves any favors there, says Honan. 

“Consumers are still looking for the best deal for the most part,” says Mityas. “But because price is so transparent [retailers] have to add other bells and whistles.”

Indeed, a survey from Deloitte found nearly half of holiday shoppers say they were smarter about prices because they comparison shop online. The survey also found that of the one in five consumers who used smartphones for holiday shopping, 56% used them to check prices. 

Driving post-sale loyalty

Multichannel merchants are adapting. Friedman points to Sears' Sunday circular on the day before Cyber Monday, which included a wrap using quick-response (QR) barcodes that could be scanned by smartphones to order some of the items online.

“My smartphone has a barcode scanner and I can tell it to take me to the Web to find a better price. How do you compete with that?” says Karson.

“Marketing is capitalizing on information dissymmetry,” Karson adds. “Now everybody has the information… I can go in my computer and get the information for 10 retailers in seconds.”

That's already spurring growth in loyalty programs and social-media-based campaigns aimed at stores' most fervent customers. During the past holiday, some merchants chose to offer rewards such as free shipping or other perks just to their social media followers, rather than discounts, says Panteva, the IBISWorld analyst.

Lands End, for example, ran a “12 Days of Twitter” campaign where it offered daily giveaways and advice from personal shoppers to its Twitter followers every day from Cyber Monday through December 11. 

“It's just targeted marketing, being able to get your message to consumers who are going to give you a return,” says Panteva. “Rather than getting people through the door, they're trying to get the right people through the door.”

Shoppers respond to loyalty programs — often better than they do to discounts, according to some marketers. A survey from Epsilon Targeting found 71% of holiday shoppers were users of loyalty rewards programs, and 11% used rewards, mostly to save on gifts.

“It provides value for customers to concentrate their shopping with one retailer, as opposed to cherry picking from all the e-retailers out there the one item they have on a good deal,” says Friedman.

Sears' Shop Your Way rewards program awards points per dollar spent in store or online at either Sears or Kmart and points are redeemed for discounts off future purchases.

With some merchants already preparing for the next holiday season, buoyed by the growth they experienced in 2010, retail observers are not forecasting the end of the holiday sale.

Yet, the move toward more efforts built on customer relationship management and less on price cuts will continue, they say, because shoppers won't be sold so easily anymore.

“Consumers are clearly conditioned to seek out and search for the best deal, and they have almost perfect information now,” says Mityas.

“Now they can see every store — online and brick and mortar — and all the deals, from the comfort of their living room,” he adds. “It creates pressure on retailers to differentiate their offerings besides price.”

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