Instead of copying Amazon.com
Inc.’s playbook, retailers such as Wal-Mart Stores Inc. and Target Corp. are
coming up with new tricks to maximize sales ahead of Black Friday.
Some are offering earlier discounts to
attract crowds before competition heats up Thursday, and emphasizing products
not available on Amazon. Others are rewarding their most loyal customers or
marking store prices lower than those online.
Amazon was the top preference for
places to begin shopping for the holidays, according to a September study of
3,785 respondents by NPD Group Inc. The findings show that shoppers are making
purchases earlier in the season, and more people are feeling fatigue around
holiday shopping than in past years, with 41% saying they would rather plan an
outing with their family and friends than exchange gifts.
Maria Pugh of Delray Beach, Fla.,
said she plans to skip the rush on Black Friday and wait till Cyber Monday to
buy housewares and check out deals for electronics on Amazon. “The shopping
malls are too crowded,” said the 48-year-old attorney. “For me, it’s more about
convenience.”
Amazon typically relies on
algorithms that scrape competitors’ prices before automatically matching or
narrowly undercutting them on its website. The online giant, which has long
prioritized sales over profits, has recently been covering the cost of discounts
on some items sold by third-party merchants. Such practices have paid off
in an environment where many shoppers are constantly on their smartphones
making comparisons.
“Online sales are traditionally
driven by price,” said Andrew Schydlowsky, chief executive of TrackStreet, a
pricing consultancy. “Retailers and brands are realizing that the race to the
bottom is very dangerous and eventually destroys the value of the product.”
For the first time, Best Buy Co.
offered hundreds of Black Friday deals on TVs and other devices in early
November in hopes of driving sales before the competition heats up. The
electronics giant has a price-matching guarantee, but the offer doesn’t apply
to items on sale Thanksgiving through Monday. Toys ’R’ Us Inc., which filed
for bankruptcy protection in September, also gave shoppers early
access to Black Friday deals.
Target, after a weak holiday
performance last year, made price cuts this year on thousands of items,
including cereal, paper towels and razors. Those moves helped in the last two
quarters, pushing the company back to positive sales growth.
In the months leading up to the
holiday, the company has shifted away from “up and down” pricing moves,
streamlining the number of promotions to focus only on “impactful” sales, said
Mark Tritton, chief merchandising officer at Target, at a media event. “Instead
of playing that game, we’re priced right from the very outset.”
The company has also reduced the
phrases it uses for discounts from 28 last year to seven, dropping language
like “weekly wow” and “as advertised.” And instead of the 10 days of deals that
it has been offering around Black Friday for the past two years, Target plans
to promote weekend deals throughout the season in hopes of encouraging
customers to visit stores on days they are more likely to make a trip. It is
also offering extra incentives to its loyalty card holders, such as early
access to Black Friday promotions.
Wal-Mart, which has long
emphasized an “everyday low price” message, has been experimenting with a new
online system, which at times results in higher
prices online than in stores for goods that would otherwise be
unprofitable to ship. Some product listings on its website now indicate an
“online” and “in the store” price.
The Bentonville, Ark., retailer
said it would sell more exclusive products this holiday as compared with last
year. Wal-Mart is offering “the absolute best prices and in deeper quantities
than the competition,” said Steve Bratspies, chief merchandising officer at
Wal-Mart U.S., on a call earlier this month.
One of the biggest pricing
battlegrounds starting Thursday will be Apple Inc. products. For the iPhone 8
and 8 Plus, Wal-Mart is offering a $300 gift card with purchase and activation,
while Target is giving out a $250 gift card and Best Buy is offering $200 cash
savings.
The Wall Street Journal is
tracking online prices on several categories of holiday items to reveal how
retailers compete on pricing since Oct. 1. Target has had the lowest prices
for a basket of 10 popular
holiday toys, including a Barbie doll, Nerf gun and Xbox videogame, on 38
of the first 47 days, according to information provided by Thinknum, a data
analysis firm. But Wal-Mart dropped to the lowest price on the Saturday before
Black Friday.
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