I recently went shopping at the Gallatin Valley Mall. I noticed a ton of stores advirtising incredible sales!! I thought, great for me, but this can't be good for the stores. I thought, I would do some research and find out why so many store are offering such good sales.
Reatilers such as Macy's and Gap have been continuing pre-holiday sales well into the new year. Some other reatil stores have even lowered prices more than they did at the hype of the hoilday shopping season. This is great for consumers because they benefits from the low prices. But the only consumers who are benefitting are those who are actually in the market place and purchasing; unlike most people who are still suffering financially from the cost of their Christmas purchases. The low demands for products in January have been driving prices lower and lower, until retailers can't afford to slash their prices even once more.
Researchers said that Christmas 2013 was the lowest consumption year since 2008 (http://www.cnbc.com/id/101355774). Many people may find this fascinating considering we are supposed to be recovering from the recent recession. This could be a red flag to companies, indicating consumers are not ready to renew their faith in buying material goods.
One way I would suggust to fix this phenenmenon would be to impliment what I call the Victorias Secret effect. This huge 2 week sale is highly publicized and advirtised and occurs every 6-months. This drives massive numbers of women into stores and online to take advantage of their "incredible" deals!! By announcing to customers that they are having a great sale and limiting the deal to a short term window, customers are much more likely to flock to see what all the hype is about. I personally fell victim to this sale. I really didn't need any of their products but because it was such a good price on everything I ended up dropping way more money than I should have on stuff I didn't need! Good job Victoria's Secret, well played! ;)
I also had other impulse buys during January. Maurice's offered and additional 75% off clearence items. I ended up getting numerouse tops for around $5 each, sweaters for around $6 and dress pants for around $8. I couldn't beleive the incredible savings on items they are trying to get rid of to make room for new spring items. A friend and I went to Rue 21, looking for tacky statement jewlrey. All the clearance Jewlrey was either $1 or $2 depending on the piece. I can't tell if I have bad tastes in jewlrey or just a better bargin hunter because almost everything I picked out was $1!
The moral of this story is for the companies trying to drive sales this year, they need to figure out a different approach besides discounting. On the otherhand, I have gotten some sweet deals and purchased many items that I wouldn't have if it weren't for the high amounts of discounting occuring.
We were actually just talking about this in my marketing research class, because after the holiday season is when fast food companies have the most sales and promotions ($5 footlong anybody). They found that this is because of everyone finical concerns coming into a new year, and also because a lot of people resolutions resolve around health. If people swear off fast food when 2014 hits, then fast food markets need to lower their prices to make their items more temping. Same concept as what you mentioned above. If people are looking to spend less money in the new year, then stores have to drop their prices to a point that customers can't help but buy their products. And it works! I too was played by one miss Victoria's Secret! But when you can get a bra that is that cute for that price, how can you say no! :)
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