Holidays will see discounting
L.L. Bean's announcement in late September that it would offer unconditional free shipping through December 21 was an early indication that the 2007 holiday promises to shape up as one of the most promotional in recent history.
The climate heated up last week, when Wal-Mart said it would hold offer a post-Thanksgiving-style in-store sale - the traditional start of the holiday shopping season - three weeks early, on November 2. The retail giant planned to reveal the savings online last Thursday.
The clincher was when, on Thursday, the Dow Jones industrials closed down more than 360 points. Concern about the upcoming holiday season was cited as a contributing factor by analysts.
Retailers are engaging in "earlier and more aggressive promotions" this year, continuing a trend that has been shaping up over the past few years, said Rob Mason, president of ADVO Inc., which provides co-op mailing and free-standing insert programs.
The only categories where promotional activity is experiencing "some softness" are home furnishings and home electronics, he continued.
In fact, 73% of chief marketing officers at leading US retailers believe discounting and promotions will be more prevalent this year compared to last year due to the current credit crunch, according to a study released last week from accounting and consulting firm BDO Seidman LLP.
The economy is the big factor driving much of this activity.
"The big difference this holiday season is that retailers don't know, come November and December, how consumers will feel about putting their hands into their wallets," said Wendy Liebmann, president of WSL Strategic Retail.
Consumers may feel uneasy right now about oil prices and mortgage issues, she added. But, they're still shopping, which is a fact retailers want to take advantage of with sales and special offers because the situation could change quickly if the economy worsens.
Mason said he expects to see a preference for FSIs because of their relatively short lead time.
As for the types of offers, free shipping continues to be the No. 1 offer that customers look for when shopping online and the most popular tactic among multichannel merchants, said Lauren Freedman, president at the e-Tailing Group, which conducts an annual survey of online retailers' promotional activity.
However, not "everybody is going to offer blanket free shipping just because L.L. Bean does it," Freedman said. Instead, there is an increase in behind-the-scenes offers sent to customers via e-mail.
More retailers are also adopting free shipping offers, including Tiffany and Bergdorf Goodman, she noted.