RETAILERS LAUNCH HOLIDAY PRICE WAR

'Advertise early and often' seems a likely scenario

With holiday sales lagging, retailers are slashing prices and filling newspapers with ads announcing price cuts.
Moreover, some retailers are expected to race back to newspapers to buy last-minute run-of-press (ROP) ads announcing additional price cuts as they occur.
Newspapers are having it both ways: They benefit from retailers who fixed their ad schedules before they realized the extent of pre-holiday sales sluggishness, and now the papers are picking up last-minute ads announcing price cuts.
"It's going to be a price war," predicted an East Coast department store executive who has been in the business for more than two decades. "Just follow this week's ads and you'll see what I mean."
Department stores and other retailers seeking to move inventory are dropping prices more dramatically than during any holiday season in recent memory, the East Coast executive said. Some retailers are promoting their price cuts by buying additional newspaper ads while others are revising previously scheduled ads to promote the new cuts, he said.
Another department store executive said newspaper ad executives must now prove whether or not they are retailers' friends.
"The best way they [newspapers] can be helpful is to understand the current dilemma of the big retailers," said the department store executive. "Help them with position, help them with price, and help them with reaction -- ability to make last-minute changes to add ads if necessary." He added that some newspapers "are terrible and some are partners ... Most are partners."
A respected retail forecaster agreed that the holidays will be marked by price battles. "There will be price wars undoubtedly simply because America is overstored and consumers will be careful about spending money," said Kurt Barnard, president of "Barnard's Retail Trend Report" in Upper Montclair, N.J. He has forecast retail industry trends and consumer spending patterns for 45 years.
"The holiday sales season is going to be decent for most retailers, but not spectacular," added Barnard. "It is going to be a cautious season for retailers because it is going to be a cautious season for customers. ... There will be gains made by most retailers, but the gains will be smaller than the gains achieved a year ago."
Newspapers "are likely to do modestly well," said Barnard. "We see this holiday season as being more promotional than a year ago." He said some retailers may buy additional newspapers ads to promote sales, but that "a lot of retailers are going to go into television."
Of course, the outlook varies from market to market.
On the West Coast, Bob Brown, the retail advertising manager of The Sacramento (Calif.) Bee, said his market was undergoing "tremendous growth" and predicted merry holidays for both retailers and newspapers.
"Retail sales will be good, [but] not great," said Brown, who has spent more than two decades in advertising at the Bee and other newspapers. As for newspaper ad sales, Brown reported that managers of chain stores in his market are worried about inventory. "They don't have enough inventory in same cases," he said. "I just know from talking to my local store managers that it is a concern."
In the heartland, a marketing executive at a Milwaukee-based department store chain said his stores' holiday sales outlook is very good. "We're quite upbeat," said Richard Schwab, vice president of marketing and administrative services at Carson Pirie Scott department stores, which operates 95 department stores in Midwestern and northern border states. He added that the home and furniture categories were particularly strong, while feminine apparel and feminine accessories also were showing strength.
Schwab, who has had success with the double punch of direct mail and "very dramatic, dominating main-section- position ROP," said he was not planning to make any changes in his holiday ad plans. "We're all set," he added. "Now it's all up to execution."
Schwab conceded, however, that his department stores' bullish prospects were not necessarily shared by other department stores. "I'm sure it's true there have been some problems throughout the year in feminine apparel, and then if your inventory positions are bad, you are faced with cutting margins," Schwab said. "You can sell a lot of it, but you are selling a lot of it at a lower price, and you are not going to make your margins."


50% Off: What are you waiting for?

Newspapers in recent days have been filled with retail ads announcing sales and listing price cuts. Here are a few newspaper ad offers:

Lord & Taylor in "The Washington Post": "Starts 9 a.m. today. Pre-Thanksgiving storewide savings ... 25%-50% off."

Bloomingdale's in "The New York Times": "Thanksgiving Sale Save 20%-50%."

Nordstrom in the "Chicago Tribune": "Women's & children's shoe clearance ... save 50% ... What are you waiting for?"

Lexington Furniture & Design in "The Boston Globe": "Save 20% to 40% off all floor samples, storewide. Plus an additional 10% on most special orders."

Macy's in the "Los Angeles Times": "Sequined top with straps in black ... Reg. $60, sale $44.99."

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(copyright: Editor & Publisher November 27, 2000)