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Deep discounts may make another appearance this holiday season

Janet Babin Oct 6, 2010

Deep discounts may make another appearance this holiday season

Janet Babin Oct 6, 2010


Kai Ryssdal: We are now smack in the middle of the Back to School-Halloween-Thanksgiving-Christmas retail crush that seems to get longer every single year. The National Retail Federation said today it expects holiday sales to be up over last year. That’s not saying all that much if you happen to remember last year, when stores practically had to give things away just to get shoppers in the door. Even though this season might be a little brighter that deep discount thing isn’t going to change all that much.

Janet Babin reports.

Janet Babin: The forecast from the National Retail Federation sounds good — sales this season are expected to rise 2.3 percent — that’s the biggest increase in three years. But that gain is going to come at a price. Deep discounts to lure reluctant shoppers could mean weaker profits for retailers.

RJ Hottovy is a retail analyst at Morningstar.

RJ Hottovy: It’s really been a tug-of-war between retailers and consumers on this front, and frankly, it’s one that the consumers have been winning the last year or two.

And will likely win again. Hottovy says a few stores have attempted to raise prices, but that’s a gamble most retailers can’t afford to take. Many are engaged in price wars. Instead, he says stores have gotten creative with promotions, pushing layaways or special deals.

Hottovy: Just doing different things with their promotional strategies: You know, timing promotions, or maybe even couponing, where if you buy something earlier in the month, you get a coupon for later in the month.

And to keep more profit from what they do sell, retailers have tamped down operating expenses.

Scott Krugman’s with the National Retail Federation.

Scott Krugman: That’s why I think you see retailers looking carefully at their staffing models, making sure they don’t have any more staff in the stores than they need at any particular time.

That could affect holiday hiring. And you may have to spend a little more time in line to buy electronics; flat screen TVs, video games and iPads are expected to be big sellers this season.

I’m Janet Babin for Marketplace.

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