With the holiday season in full swing, retailers don’t have to only rely on deeper discounts for better sales.
According to pricing strategy consultant Rafi Mohammed, there are other holiday season strategies for retailers that won’t kill their margins after Cyber Week, the Harvard Business Review reported.
Mohammed said that retailers’ price-slashing craze stems from the fact that holiday season shopping has dramatically expanded to other channels, including m-commerce and e-commerce, which doesn’t allow companies to limit sales to Black Friday anymore. With the extension of holiday promotions from November to January, shoppers may spend less and essentially take advantage of retailers’ hard to resist discounts.
“While customers used to count on Black Friday for the lowest prices of the season, in recent years retailers have been advertising “best deal” sales regularly throughout November and December,” Mohammed said. “As a result, customers have been conditioned to expect discounts.”
Due to consumers demanding more promotions, retailers feel the pressure to sell merchandise at extremely low prices, which minimizes their holiday season profitability and opportunity to sell items at full price in future weeks. To help retailers compete strongly during the holiday season and secure shopper purchases, Mohammed suggested four key margin-preserving price strategies.
Now that holiday season discounts span from one day to two months, many shoppers feel stressed about when they should start buying presents. Often consumers fear that they will buy items and then find them at a lower price a few weeks later. To remedy this situation, retailers may want to offer a price guarantee throughout the holiday season. With a price guarantee, shoppers are less anxious and more likely to buy items. Retailers secure sales in the long run because shoppers will do their homework and reach out if there are pricing issues.
Step discounts are also another potential strategy for retailers during the holiday season. Mohammed said that step discounts, such as 10 percent off for purchases over $500 and 20 percent off if over $1,000, encourage shoppers to spend more at one retailer. Plus, shoppers are more likely to buy more products if they know they will achieve a higher promotion in the long run.
Enticing customers to make large purchases on the spot is also another way for retailers to secure holiday season sales. With this strategy, retailers may want to consider offering additional discounts if consumers opt out of returns or price adjustments.
“This option acknowledges that prices may be lowered in the future,” Mohammed said. “However, customers can avoid the hassle of constantly checking prices and earn an extra discount by taking the risk of buying today.”
Flash sales are also a great solution for retailers to boost consumers’ holiday season purchases. Instead of featuring a unified promotion for a few hours, retailers may want to keep flash sales confined to exclusive products. If shoppers see that certain items have more discounts over others, they are more likely to buy on the spot.