Retailers concerned heading towards holiday season

July 5, 2010 5:51:23 PM PDT
Tired of waiting for consumer spending to rebound, some retailers are taking matters into their own hands by offering some unusual incentives that go way beyond sale prices and markdowns.

Retailers, including Target, seem to understand that consumers are holding onto their cash. So, by putting more cash in their hands, maybe they will spend it. The bait of putting goods on sale is not working any more.

"It's become white noise to consumers. They don't hear 'sale' anymore. So, retailers now have to be more creative and come up with new ways," says Golden Gate University consumer psychologist Kit Yarrow.

The new mantra is "cash back" or "free." This fall, Target will offer five percent discounts on purchases made with its store-branded credit and debit cards. At Sears, customers who open up a Christmas Club savings account will get a 3 percent bonus and Office Depot will be giving away small items like markers for free.

Target shopper Matt Preshoff thinks the new incentives work.

"I think that people already think that they're getting a good deal at Target when they come here and I think incentives just add to that feeling that they're getting a good deal, and it's one-stop shopping for people," he says.

Yarrow says retailers are facing reformed shoppers, shoppers worried about the economy and especially about their job security.

"There's no more rampant consumerism," she says. "I think today, consumers are very considerate about what they choose to buy. They really think about it before they put out their money."

Toys R Us is also offering a 3 percent bonus on deposits to its Christmas Savers Club. However, some shoppers are not sure it is going to unleash their spending.

"I know that a lot of people value those incentives, but me personally, the 5 percent back or what have you, it's a better value to shop at an inexpensive place than shop at one that's going to give the money back," says Tamika Ware of Santa Clara.

Call them reformed shoppers or tight-fisted. Retailers are trying to pry every penny they can from their hands.

"Now, what retailers have to do is really think in a fresh, creative way about what satisfies the needs of a more frugal, more conscious consumer," Yarrow says.

Small business owners are not being left out either. They are a substantial percentage of customers at Sam's Club where they are offering help with applying for small business loans.


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