As much as retailers don’t like it, consumers just aren’t spending much money right now–on anything. Most Americans are focused on buying the essentials and eliminating the extras, and socking away as much extra money as they can. Some are doing it out of necessity, and others are doing it out of safety. Regardless, this lack of spending could spell disaster for many stores during the Christmas season, which retailers typically depend on to make most of their profits for the year.
In order to make up the difference, stores like Wal-mart, Target, and Toys R Us are having to come up with creative market strategies to encourage consumers to buy the “extras” this Christmas (and to choose their store to buy them in).
At Wal-mart, you’ll find a $10 toy section featuring more than 100 toys that have been “rolled back” in price. Target is leveraging the power of their many designer labels to encourage consumers to buy discount designer products at their store, ranging from clothes to home décor items and makeup. Toys R Us is opening more stores to make it easier for customers to shop there–they’ll open about 300 temporary “Toys R Us Holiday Express” shops across the country.
Sears and K-mart have started a “Christmas club” of sorts, by offering customers the ability to load money little by little on a debit card, and they’ll receive a 3% bonus in November, up to $100. K-mart also offers layaway, for those who prefer to reserve their purchases now and make payments as Christmas comes closer.
I think we’ll see a lot of deep discount sales and promotions that encourage consumer loyalty this Christmas, as stores fight for what little business there will be. With unemployment percentages so high, the money is simply not there for many people who would ordinarily spend several hundred dollars on Christmas gifts. How will your spending habits be changing this year?