Discounting NOT Always Good for Department Stores

As we have noted before, department stores such as Macy’s regularly offer discounted prices on many items. This may draw some added traffic and revenues, but does this increase profitability and draw profitable customers — and really help the department stores?
According to a recent RetailWire article by George Anderson, the answer is a resounding NO:
“Have sales promotions become a [“danger”] for department stores? Allen Questrom, the former CEO of J.C. Penney, thinks they have and said so in an interview on the CNBC show ‘Squawk Box.’ Mr. Questrom, who was credited with turning Penney around in the early 2000s, said department stores have fallen back on sales promotions whenever business begins to slow. ‘Sale[s] cannot be the only driver, it has to be a part of it. But product, presentation, excitement in the stores, the salespeople in terms of servicing the customer’ all need to be part of the value proposition for department stores to succeed.”
“He pointed to Zara and Uniqlo as two clothing chains that have learned how to drive business without relying primarily on sales to attract shoppers, primarily Millennials, to stores. Department stores need to understand that Millennials, unlike their Baby Boomer parents, search for ‘inspiration, not aspiration’ when they shop, he said.”
“Research by NPD Group, released in July, found that two-thirds of consumers who shop for clothes do so at off-price stores. While consumers 45+ make up more than half of shoppers in off-price locations, Millennials are increasingly attracted to these shops. People between the ages of 25 and 34 represent 16 percent of shoppers in off-price outlets and their numbers are growing. Many department stores have opened their own off-price stores in response, but those moves have not directly benefited their full-price businesses.”
Click the image to read more.

Photo: RetailWire

Photo: RetailWire


 

This entry was posted in Part 1: Overview/Planning, Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 6: Merchandise Management and Pricing, Part 7: Communicating with the Customer, Part 8: Putting It All Together and tagged , , , , , , , , , . Bookmark the permalink.

One Response to Discounting NOT Always Good for Department Stores

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