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Retail Management 12th Edition by Barry Berman ,Joel Evans
Edition 12ISBN: 978-0132720823Retail Management 12th Edition by Barry Berman ,Joel Evans
Edition 12ISBN: 978-0132720823 Exercise 18
Case 1: Making Every Day Seem Special
While the expression "Christmas in July" may mean one thing to consumers (a sale), to retailers it reflects "Christmas creep," the practice of shifting holiday sales to earlier time periods. Worried about the effects of the recession and its aftermath on sales, retailers have increasingly pushed Christmas sales periods to the summer months. They are hoping to extend the Christmas buying season and to encourage consumers to increase their total expenditures. Among the retailers that have launched sales in summer months are Kmart (www.kmart.com), Target (www.target.com), and Toys "R" Us (www.toysrus.com). Stephen Hoch, a Wharton marketing professor, notes that this seasonal shift has spread across all retail formats-from luxury department stores to value-based retailers.
Erin Armendiner, managing director of the Baker Retailing Initiative at Wharton, views the situation as similar to a game of "chicken" with the retailers offering moderate price reductions for as long as possible, hoping to sell goods at or near full retail price. In turn, consumers have delayed their purchases in an attempt to force the retailers into providing additional markdowns. Armendiner says: "It's this game of who was going to break down first."
One retail consultant believes that successful early seasonal sales by one retailer may encourage other retailers to match or even beat the first retailer's price. "If [one chain] moves its [sale] three days ahead, then [a competitor will jump] a week ahead. Then they go 10 days ahead, and you go two weeks ahead … and it just keeps going." As a result, a tongue-in-cheek comment is that next year's Christmas season will start "in the middle of January clearance at the rate they are going."
The Christmas creep phenomenon has some interesting implications for retailers beyond the changes in their markdown and promotional activity. In the past, retailers would change displays on a given day to reflect the beginning of a new selling season. Now, many retailers are offering a balance of clothing from shorts and bathing suits to cotton and wool sweaters and corduroy slacks to reflect both seasons. In contrast, many consumers have taken the opposite approach by delaying the purchase of seasonal goods. Some retailers, including Abercrombie Fitch (www.abercrombie.com), have resisted the use of extensive markdowns. Instead, they have lowered their initial price levels.
Several experts expect the Christmas creep phenomenon to be a long-term development that will continue even following the after-effects of the recession. Due to the heavy use of discounting, many consumers are becoming increasingly wary of purchasing goods that are not on sale. As one consultant says: "If you stop doing it [conducting sales early in the buying season], people will stop buying. It's like a drug that you can't get off of."
Questions
1. What is the effect of a retailer's strategy of extensive use of markdowns on its overall retail image
2. Discuss the impact of "Christmas creep" on a retailer's overall promotional strategy.
3. How can retailers address the impact of the game of chicken in the timing of their promotions
4. Do you agree that the Christmas creep phenomenon will be a long-term phenomenon Why or why not What do you recommend that retailers do
While the expression "Christmas in July" may mean one thing to consumers (a sale), to retailers it reflects "Christmas creep," the practice of shifting holiday sales to earlier time periods. Worried about the effects of the recession and its aftermath on sales, retailers have increasingly pushed Christmas sales periods to the summer months. They are hoping to extend the Christmas buying season and to encourage consumers to increase their total expenditures. Among the retailers that have launched sales in summer months are Kmart (www.kmart.com), Target (www.target.com), and Toys "R" Us (www.toysrus.com). Stephen Hoch, a Wharton marketing professor, notes that this seasonal shift has spread across all retail formats-from luxury department stores to value-based retailers.
Erin Armendiner, managing director of the Baker Retailing Initiative at Wharton, views the situation as similar to a game of "chicken" with the retailers offering moderate price reductions for as long as possible, hoping to sell goods at or near full retail price. In turn, consumers have delayed their purchases in an attempt to force the retailers into providing additional markdowns. Armendiner says: "It's this game of who was going to break down first."
One retail consultant believes that successful early seasonal sales by one retailer may encourage other retailers to match or even beat the first retailer's price. "If [one chain] moves its [sale] three days ahead, then [a competitor will jump] a week ahead. Then they go 10 days ahead, and you go two weeks ahead … and it just keeps going." As a result, a tongue-in-cheek comment is that next year's Christmas season will start "in the middle of January clearance at the rate they are going."
The Christmas creep phenomenon has some interesting implications for retailers beyond the changes in their markdown and promotional activity. In the past, retailers would change displays on a given day to reflect the beginning of a new selling season. Now, many retailers are offering a balance of clothing from shorts and bathing suits to cotton and wool sweaters and corduroy slacks to reflect both seasons. In contrast, many consumers have taken the opposite approach by delaying the purchase of seasonal goods. Some retailers, including Abercrombie Fitch (www.abercrombie.com), have resisted the use of extensive markdowns. Instead, they have lowered their initial price levels.
Several experts expect the Christmas creep phenomenon to be a long-term development that will continue even following the after-effects of the recession. Due to the heavy use of discounting, many consumers are becoming increasingly wary of purchasing goods that are not on sale. As one consultant says: "If you stop doing it [conducting sales early in the buying season], people will stop buying. It's like a drug that you can't get off of."
Questions
1. What is the effect of a retailer's strategy of extensive use of markdowns on its overall retail image
2. Discuss the impact of "Christmas creep" on a retailer's overall promotional strategy.
3. How can retailers address the impact of the game of chicken in the timing of their promotions
4. Do you agree that the Christmas creep phenomenon will be a long-term phenomenon Why or why not What do you recommend that retailers do
Explanation
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Retail Management 12th Edition by Barry Berman ,Joel Evans
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