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Retailers Start Holiday Discounts Early

15 October 2014 in Trading Ideas

Christmas may be 10 weeks away, but for many of the nation’s retailers, the holiday shopping season has already begun.

The Detroit Free Press recently noted that retailers are gearing up for a holiday season that is expected to feature bigger promotions and sales than last year, as companies are reeling from disappointing profit reports and desperate to attract shoppers.1

“The consumer today is just fanatical about saving money,” Britt Beemer, chairman of retail strategy firm America’s Research Group, told the newspaper. “I think you’re going to see more retailers jump into the sale strategy. I think they’re going to be more aggressive and you may see bigger discounts earlier.”

The focus on discount retailing has also spilled over to the investing landscape. The Discount Nation motif has gained 4% over the past three months. In that same time, the S&P 500 has lost 4.7%.

So far this year, the motif is down 2.2%; the S&P 500 has gained 3.1%.

A year ago, this new discounting emphasis meant almost two months of holiday sales, including almost every big-box and mall store opening for business on Thanksgiving night instead of waiting for the traditional Black Friday start, the Free Press said.

This year, according to the Free Press, Kmart is already wooing shoppers with no-down-payment layaway and aired its first holiday commercial — in September.

Meanwhile, Wal-Mart will keep all front-of-the-store checkout lanes open during peak shopping hours on weekends, starting the Saturday after Thanksgiving and continuing until the weekend before Christmas.

Wal-Mart has also boosted its media strategy, the Free Press said. For the first time, the retailer invited gift guide editors to a special event in June that showcased its top holiday offerings. In early September, it presented its list of top toys for the holiday season.

Target has expanded its hours at about half its stores, already keeping some open until midnight, in an attempt to make inroads with late-night shoppers.

And Toys R Us has added online layaway, while revamping its rewards program, allowing shoppers to earn $5 back for every $125 they spend.

The Free Press said that stores everywhere are expected to push the idea of shopping online and picking up items in stores, which often means a shopper gets the merchandise more quickly. But it also cuts down on a retailer’s shipping costs, and, according to a survey by comScore cited by the Free Press, 43% of shoppers make an additional purchase when they go to a store to pick up an online order.

That strategy could be the gift that keeps on giving – both for retailers and those investing in discount retail stocks.

1Georgea Kovanis, “Retailers already wooing holiday shoppers,” usatoday.com, Sept. 14, 2014, http://www.usatoday.com/story/money/business/2014/09/14/retailers-already-wooing-holiday-shoppers/15609835/, (accessed Oct. 13, 2014).