Friday, July 1, 2016

How to Play the July 4th Sales

As retailers extend discounts past their ‘final hours,’ shoppers adjust to perpetual promotions

Retailers launch sales to get consumers’ attention, but so many holidays sales are making regular prices lose value. WSJ ‘On Style’ columnist Christina Binkley joins Lunch Break with Tanya Rivero with the details. Photo: Allison Scott/The Wall Street Journal
With the July 4th holiday approaching, watch for emails landing in your inbox pitching big sales from retailers on this traditional summer sale day. They’ll start by offering deep discounts. Then on Monday, they’ll press the urgency—Final hours! If past experience is any guide, you may wake up July 5 to find the sale has been extended and is still going.
As they battle for attention, retailers are increasingly playing a hurry-up-and-wait game, which leaves consumers struggling to figure out when the sales are climaxing with maximum discounts.
Retailers over Memorial Day repeatedly warned shoppers they’d better move fast. “Only Hours Left!” Lands’ End announced in an email blast Monday afternoon. “Last Chance,” Pottery Barn intoned. But by Tuesday, their sales and others’ were still on. “Memorial Day might be over, but our sale is not,” said an email from menswear seller Knot Standard.
Pottery Barn extended its Memorial Day sale through Tues., May 31.ENLARGE
Pottery Barn extended its Memorial Day sale through Tues., May 31. PHOTO: POTTERY BARN
Deep discounts for some retailers including Neiman Marcus, which also extended its Memorial Day sale, have lasted virtually all month. Some Fourth of July sales started early. Pottery Barn was advertising 70% off for its Independence Day sale as early as June 23.
Retailers agonize over whether and when to offer discounts, and fashion brands hate sales. They risk teaching consumers to wait for a sale to buy and make it tougher for retailers to sell items at full price. Extending a sale with an email blast creates a potentially even more potent mix: It could make it tougher to convince consumers to buy discounted items because they wait for an even better offer. A shopper who rushes to buy after an urgent email says a sale will end may be annoyed to wake up the next morning to an email saying the sale continues.
“Basically, it’s always a sale now,” says Barry Schwartz, a Swarthmore College consumer psychologist, professor, and author of The Paradox of Choice a groundbreaking 2004 book that argued brands benefit from offering fewer choices. “The retailers are killing themselves.”
Old Navy extended its Memorial Day sale. ENLARGE
Old Navy extended its Memorial Day sale.PHOTO: OLD NAVY
The retail landscape is brutal these days. Stores are struggling to get traffic as more shoppers go online. There has been a string of disappointing earnings from retailers including Macy’s, Nordstrom and Gap. Stores are closing. More merchandise is being sold on sale.
Shoppers are doing more research and waiting to make purchases, says Dr. Schwartz, “because the signals they get from the market are completely unreliable.”
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“Guys won’t buy online without a discount,” says Matthew Mueller, co-founder and president of Knot Standard, which continued its Memorial Day sale to Tuesday because it figured men would be too busy enjoying the weekend to shop on Monday.
On the afternoon of May 30, Memorial Day, Lands’ End sent out a promotion for a Memorial Day sale, saying “Only Hours Left.” But it extended the sale through May 31, above, with a promotion sent Tuesday morning.ENLARGE
On the afternoon of May 30, Memorial Day, Lands’ End sent out a promotion for a Memorial Day sale, saying “Only Hours Left.” But it extended the sale through May 31, above, with a promotion sent Tuesday morning. PHOTO:LANDS’ END
Lands’ End’s chief executive, Federica Marchionni, says the retailer decided to extend its Memorial Day sale late that Monday afternoon. Sales have been difficult this year, but picked up with the new discounts that weekend. “The business was suffering, so we said, let’s extend one more day,” Ms. Marchionni says. “We don’t want to extend every time.”
Rather than discounting, she says she would prefer to set a “fair price” and stick to it. “We have great chinos for $59,” she says. “We are now obliged [to hold sales], because this industry is so competitive, but it’s not what we want.”
“Retailers have no choice” but to extend sales, says branding consultant Martin Lindstrom. He says holding a one-day sale can actually reduce the number of shoppers who will participate. “People today are so busy that they cannot find the time to go into a store on a particular day,” says Mr. Lindstrom. “If stores set a deadline, visitation drops 20 to 25%.”
Neiman Marcus held a sale on Memorial Day that was still going on June 2.ENLARGE
Neiman Marcus held a sale on Memorial Day that was still going on June 2. PHOTO: NEIMAN MARCUS
Sale prices are becoming the “new normal,” saysDominique Hanssens,professor of marketing science at UCLA’s Anderson School of Management. Several years ago, roughly 40% of purchases were made on sale, a number that has risen substantially in the past year or two given the rapid recent escalation of sales, he estimates.
For July 4, Lands’ End will try a different tack: a promotion that doesn’t involve discounting. The hope is to shift consumers’ attention to the value and story behind its products. Lands’ End will launch a new “1776” coat, an homage to the holiday, that shoppers can pre-order and receive with a gift book by illustrator Sam Fink on the Declaration of Independence.
Lands’ End is also planning for a July 4 sale, Ms. Marchionni says.
Knot Standard is trying to avoid discounting by launching a sweepstakes for shoppers to win a tour of Italian fabric makers this fall. Late last week, the company’s executives remained unsure of whether they would also offer a sale online. “There’s no way you can get out from under that once you start,” Mr. Mueller says.
Old Navy, which extended its Memorial Day sale, is now anteing up its July 4 offerings with a “Feel the Spark” sale offering discounts of 60%. “The July 4th weekend is a key moment in the summer shopping season,” says an Old Navy spokeswoman.

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