It’s beginning to look a lot like January, even with nearly a week left until Christmas. Retailers started post-Christmas markdowns extra early this year.
Deloitte analyst Jason Gordon explained it this way: “There’s a finite amount of spend. If one of your big rivals goes on Sale, you don’t have any choice. You’ve got to get your share of the action, otherwise it’ll go to your competitor and be lost. It’s a game of chicken and there’s only going to be one winner – the consumer.”
Of course heavy discounting carries a price, particularly the time of year when retailers typically earn much of their margins. Not only are retailer margins slimmer, but discounts can devalue the brands on deal.
What is notably not on promotion this Christmas is the iPad2 and iPhone 4S, reminding us that it’s more important than ever for marketers to create products with real meaning. A recession is a litmus test for meaningful brands (as I sketched in this Share of Wallet cartoon in 2009).
Thanks for all of your continued support and encouragement in 2011. Happy holidays, everyone!
(Marketoonist Monday: I’m giving away a signed print of this week’s cartoon. Just share an insightful comment to this week’s post. I’ll pick one comment by 5:00 PST on Monday. Thanks!)
Jonathan Ewing says
December 19, 2011 at 7:16 amI sang today’s cartoon for my coworkers.
Kevin McFarthing says
December 19, 2011 at 10:25 amVery insightful, Tom. Retailers always want to boost their brand equity, usually meaning “we’re the cheapest” and to hell with the rest. It’s a long term erosion of value, because they benefit from strong brands as well.
In this race to the bottom, the best example that comes to mind is a UK campaign a couple of years ago for Stella Artois. They must have broken the GRP record with a series of great ads using the tagline – “reassuringly expensive”. Then every time I went into a store, there it was piled high with BOGOF or big price reductions. Oh dear, not exactly an integrated 360 plan…..
Tom says
December 19, 2011 at 11:17 amThis was an outstanding comic. It’s interesting that no matter how many BOGO’s that are out there, that certain products don’t seem to be moving. Most retailers are trying to empty their shelves. Case in point was Target & Kmart who are running after Christmas sales on Christmas decorations 2 weeks before Christmas. I’m not quite sure if they’re trying to free up shelf space or if they’re just guaranteeing that they get rid of everything. It also means that the secondary retailers are going to make a killing. It’s a good year for the consumer.
Another interesting point, there doesn’t seem to be a lot of “must have” gifts this year. Where’s the tickle-me Elmo of 2011?
Vanessa Ramirez says
December 19, 2011 at 11:20 amGreat point! The long-term affect on the brand is sometimes not considered. The year-round coupons is not any better, I mean who goes to B,B&B without a 20% off coupon now a days? I only shop at Express when I have a $30 off $75 coupon- I used to shop there all the time, with or without coupons, but those coupons were mailed more and more often which changed my shopping habits there.
Joy says
December 19, 2011 at 6:31 pmNot sure I totally get the tension between offering sales as an incentive to shop, and protecting the brand from “cheapening,” but I have seen it in action. The clothing line I rep doesn’t go on sale. If a customer purchases her fall wardrobe the first day the season launches, she will pay the same price as the 11th hour shopper five months later. This frustrates some people, and also makes some scratch their heads with “how does Joy stay in business when the malls are slashing prices?” Not sure I have the answer, but I can see that it does work to simply offer great service and a great product and let the consumer decide how to welcome it… love your toons! Kiss Tallie for me
Graeme says
December 19, 2011 at 8:46 pmIt appears as though there’s a tautology in your “share of wallet” – iPhone and Essentials!
tomfishburne says
December 22, 2011 at 8:15 amHi all,
Many thanks everyone for your your comments this week!
This week’s cartoon print goes to Kevin. I love the Stella Artois example on BOGOF. That image alone would make a funny cartoon. Kevin also shared an important reminder that the retailers are at risk of devaluing brands with so much discounting.
Tom’s point is spot-on too: what is the Tickle-Me-Elmo of 2011?
-Tom
Shawna says
December 22, 2011 at 5:24 pmThere was a NYTimes article on just that topic – there is no hit toy this year. http://www.nytimes.com/2011/12/13/business/no-hit-toy-to-brighten-retailers-christmas.html
Vanessa’s comment is spot on. There are some favorite shops of mine that I won’t go to without a coupon since I know one will show up without too much of a wait and others that I perceive as higher value since they never (or extremely rarely) go on sale.
And since I sign up for coupon e-mails from my favorite shops, I’ve been stunned to find 20+ emails a day in my inbox from retailers – sometimes more than one per retailer every day and each with a coupon or notice of a sale – since before Thanksgiving.