Sales At What Price?

Even though the winter holiday season is two months away, some retail stores have already put out Christmas tree displays, expanded their toy selections, and are even playing holiday music. Even with a poor economy and the jobless rate still over 8 percent nationally, some retailers are positioning themselves early to bring in holiday-minded shoppers looking for a bargain. 

More consumers are paying attention to sales and finding ways to stretch a dollar. Knowing this, and the fact that the holiday sales represent between 25 and 40 percent of annual sales for many retailers, some retailers will stop at nothing to get traffic in the door. One major retailer is taking a different track this holiday season. According to a recent Reuters article, Target CFO: Won't chase holiday sales "at all costs," Target is taking a more conservative approach this holiday season. Instead of joining in the cost-cutting frenzy, it's beating its own drum.

In the article, CFO John Mulligan said Target wasn’t interested in driving sales at all costs. It’s a refreshing statement from a major retailer that respects the company and the consumer. This attitude is a reminder for sales professionals to determining their priorities with the customer in mind. 

Respect for the customer

While customers want a good price, they also want value. Every retailer has what it calls “core customers.”  These are the loyal customers who shop a brand regardless of a difference in price. These loyal customers deserve quality merchandise regardless of the time of year  Sales are important, but not at the risk of trading quality for quantity. Once the holiday shopping frenzy is over, those bargain-hunting new shoppers will move on to the next sale. Core customers come back again and again.

Value and price

Drastically cutting prices may bring new shoppers into the store, but lower-cost goods may also mean lowering value and quality as well. Like other companies, Target is partnering with fashion designers and upscale brands to bring in quality merchandise at good prices. The strategy is to bring in new shoppers who may not have shopped Target but will come in for the brands they already use but purchased from a higher-end retail store. It’s a smart way to introduce a new buying experience.

It’s difficult to say who will win in the end. Large retailers like Wal-Mart put the pressure on by slashing prices. This year with the economy still lagging, the competition and early sales figures could force Target to change its strategy. With consumers sure to continue to look for the best bargains, retailers may have to follow suit and join in the cost-cutting wars to make the most of holiday buying frenzy. 

For consumers looking to get the best value for their money, a strategy that puts the interest of core customers first may be a winner. The holiday shopping season is stressful and tiring. Who needs the added pressure of spending money on lower-quality merchandise trucked in just for the season? Companies who cater to their core customers and their preferences will be able to extend the buying season long after the holiday music and the frantic shoppers are gone.