Holiday shoppers seem to be getting fatigue from discounts.
(Photo: Brennan Linsley, AP)
Holiday shopping has customers falling ill - from discount fatigue. Bombarded with daily e-mails from retailers and bored by blanket offers of 40% off, shoppers are tuning out.
"I delete so many e-mails," says Diana Taft, 49, of Ellington, Conn. "Unless it's something specific that I'm looking for, I don't even read it. It just becomes noise."
J. Crew has a standing offer of 30% off everything in stores and online this holiday season. Walmart kicked off this week with another round of online deals under the name "Gold Monday." Cyber Monday, Dec. 2, turned into Cyber Week as retailers extended discounts throughout the entire first week of December. And retailers including Toys R Us and Macy's are planning more deep discounts and around-the-clock store hours to lure shoppers in the final days before Christmas.
Never has the discount, and its power to spur purchases or cause customers to wait for something better, been more on display than this holiday season, retailing experts say. But as merchants try to outdo each other to drive traffic and sales, they've turned the deal from exciting to expected.
"The deal is not so special anymore," says Alison Jatlow Levy, a retail strategist at consulting firm Kurt Salmon. "The deal has become the norm. And if the deal is the norm ... it actually just trains the consumer to never buy at full price."
That can come at a cost to retailers, who often have to sacrifice their margins and profitability to be competitive on price.
Best Buy said last month that offering promotions in line with other retailers for the holidays would cut into the company's profits.
Discount e-mails lose their punch
As retailers succumb to a near-constant state of discounting, customers have become numb to those discounts, What once was a steal now doesn't even faze shoppers, says Brad Wilson, founder of BradsDeals.com.
"It takes such a large discount to even get our attention now," he says.
Taft pays attention to a discount e-mail only if a retailer offers her a promo code. If she receives an e-mail offering 30% off only to find that the website and store are advertising the same sale for everyone, she's turned off.
"Payless will text you a code that only you get," she says. "I'm more likely to look and shop and act now than if it's one of those blanket deals, because I know it's basically just for me," she says.
Shoppers say they ignore or delete e-mails from retailers because they get too many and the content rarely catches their attention. Nancy Leary of Bonita Springs, Fla., says the continuous discounting makes her wonder whether she's truly getting a bargain on what she buys. Kevin Merrill, 33, says he and his wife joke about how the J.Crew Outlet will phrase its next promotional e-mail.
"Since Black Friday, they have had a different way of offering the same deal," says Merrill, an advertising project manager in Miami. "First offer was 50% off the entire site. Then it was 20% off already reduced prices. This went on over and over. We are waiting for an e-mail of empty shelves that says 'We sold it all. Thanks.'"
At a certain point, shoppers say, it's too exhausting trying to make sure you got the best possible price on an item.
"I'd rather not see that something I purchased last week is yet again reduced further," says Cheryl Willis, 66, in LaVale, Md. "I don't have the time or patience to return my items and stand in line to get a refund."
Retailers take risks
Despite discount fatigue setting in, that doesn't mean we want to give up deals, Jatlow Levy says. We've just become savvier at knowing when to pounce on a purchase, while retailers have to work harder to get our attention. But even retailers that pester us with discount notices aren't completely turning us off. At the right moment and the right price, we'll buy, says Marshal Cohen, chief retail analyst at The NPD Group.
"If you offer a good deal, the customer will come," he says.
The ultimate consequence of all this discounting, though, could be a significant hit to retailers' profits. Offering confusing deals or deals that aren't very competitive can lead to a decline in store traffic, says Will Weidman, senior vice president at Applied Predictive Technologies, a company that helps retailers test sales strategies. And because shoppers have been trained to wait for big discounts, retailers are in risky territory catering to the expectation of a sale, Cohen says. He says the shift in loyalty to price over brands is "dangerous."
"If we become a price-focused retail community, then profit is going to be much more difficult to achieve," he says. "As soon as profit goes out the window, there go jobs, there goes more merchandise, there goes the whole economic base again. We need retail to continue to thrive."