More retailers turn to discounts to lure shoppers
With consumers buying fewer big-ticket items as prices continue to rise, retailers are trying out a strategy to woo shoppers back to those nonessentials, like furniture and TVs.
Case in point: Target. This week, it warned investors of the need for more discounts. And many retailers are, in fact, advertising discounts and promotions these days.
When Flower Sifuentes went online to find the best price for a particular salt spray for her curly hair, she saw the product at Ulta, and a $5 off promotion caught her eye.
“I don’t shop bougie Ulta, but when I got the email with a discount, guess where I went yesterday?” she said.
She went to an Ulta store in Houston to get her salt spray and ended up buying some mousse too. “When I was there, I spent more than I wanted to because I bought another product too, but I only went because I had that coupon.”
Retailers have increasingly been using discounts and promotions like this to encourage shoppers to keep spending, pointed out Sonia Lapinsky, a retail analyst with AlixPartners.
“They’re using them to lure them into the store in the hopes that they can then upsell them on additional products that might not be at such a level of discount,” she said.
Retailers who cater to middle- and low-income shoppers are especially leaning on discounts since inflation is hitting those consumers hardest, Lapinsky added.
That includes stores known for their discounts, like Walmart, that may have additional reasons for slashing prices, said Mintel retail analyst Diana Smith.
“They are trying to get rid of some of their excess inventory to better position themselves for the future,” she said.
But Smith said that too many discounts can be bad for business. They can hurt a store’s image long-term, and “it does eat into bottom-line profits,” she said. “Retailers are already challenged right now because they’re having to deal with the higher costs as well.”
At the same time, Claire Tassin at Morning Consult said customers return to shops that cut them a deal during hard times.
“They feel like they’re the retailers maybe doing the right thing for them in that moment,” she said. “And that can help to build consumer trust.”
Tassin added that if a store isn’t offering discounts, it could be the perfect time for a competitor to drop in with a coupon and steal a customer.