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Pulling shoppers off discount addiction

Rachel Dornhelm Nov 30, 2009
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Pulling shoppers off discount addiction

Rachel Dornhelm Nov 30, 2009
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Bill Radke: Holiday buying was not too shabby over the weekend. The National Retail Federation says total spending was $41.2 billion — about the same as last year. But here’s the problem if you’re a retailer: Once you have trained your customers to expect discounts, how do you get that genie back into the bottle? Here’s Marketplaces Rachel Dornhelm.


Rachel Dornhelm: The challenge for stores now is to break customers of their addiction to sale prices — what some are calling “discount detox.”

Tom Chin: But it’s a very long road, I think, in terms of really getting that consumer to really want to buy full price again.

Tom Chin tracks the retail industry for the Telsey Advisory Group. He says last year, merchants had to resort to unplanned discounts to clear merchandise.

How to resurrect full-price retail? NPD Group analyst Marshal Cohen says stores are gradually phasing out discounts.

Marshal Cohen: So it’s really about getting the consumer to recognize yes, there’s a discount on it, but the discount isn’t going to be bigger the longer you wait.

But Cohen says adjusting prices isn’t the only way to get consumers to fork over more money.

Cohen: It also comes down to making creative and interesting and innovative product. That’s also one of the things that the retailers are trying to do — and that means that they’re going to have to actually get more aggressive with innovation.

Cohen points to Apple as a company that keeps unveiling new products and services — and offering few markdowns.

Tom Chin says in the apparel world, the model looks like H&M’s partnership with high-end designers. That means limited edition clothing that draw consumers willing to pay full price.

I’m Rachel Dornhelm for Marketplace.

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