‘Lowest Net Cost’ Drives Shoppers

Articles
July 30, 2010

‘Lowest Net Cost’ Drives Shoppers

Retailers impatient for the start of a genuine shopping rebound are resorting to one trick they know draws attention – Black Friday-type sales, but in the dog days of summer.

Retailers impatient for the start of a genuine shopping rebound are resorting to one trick they know draws attention – Black Friday-type sales, but in the dog days of summer. The tactic smacks of desperation to us at The Lempert Report. It screams ‘we are devoid of ideas that would satisfy our customers, generate trips, form closer customer bonds to our stores, and mutually support the brands that help make our success possible – so we are coming up with a smattering of hot deals in a laggard sales period, and naming it after the biggest shopping day of the year.’

Black Friday isn’t a great name to begin with. The color associates with death – and that was the case at a 2008 sales event in a Long Island Walmart, when a store worker was crushed by the early morning stampede. Black, to us, also connotes the bait-and-switch flavor of these sales because supplies of the most desired low-price items are scant. Thus, the end of hopes of bargain seekers who went to the store in good will and possibly left with empty hands and ill will.

So what are we to call these new summertime events reported by the Washington Post by Target, Toys R Us andSears/Kmart? How about the Yellow Yawn? The yellow reflects both the summer sun and the retailer’s lack of backbone and ingenuity in reverting to yet another sale; yawn reflects the irrelevancy of these events to consumers today.

If sales figures actually show that these concepts have traction, The Lempert Report would wonder how much of the volume represented cannibalization of future sales, and what do these events accomplish besides training shoppers to wait for deep discounts before buying.

Where food purchases are concerned, the triple play for greatest value has been when a consumer could align a sale price, a savings coupon and a frequent shopper incentive – all on the same item. To stretch the baseball analogy one step further, a home run would include the timing with one of these Black Friday events.

If, as we believe, it is all about lowest net cost of the market basket for consumers, then stores need to offer genuine value and less hype on a consistent basis. True, a ‘home run’ alignment on numerous food products could possibly be achieved in supermarkets with some regularity to be compelling without the unpleasant drama of Black Friday shopping. Yet maximum savings – low net cost – is a driving shopper motive today, as shown by coupon redemption trends through the first half of 2010. According to the Mid-year 2010 CPG Coupon Facts Report by NCH Marketing Services, a Valassis company, overall redemption volume has risen 7.9% year-to-date, marking the seventh straight quarter of year-over-year increased coupon usage.

“Consumers are adjusting their spending and becoming more strategic in their purchases as deal-seeking escalates. Today’s shoppers don’t leave the house without their coupons and they don’t seek savings in just one place or from one media source,” said Suzie Brown, Valassis chief marketing officer.