Retailers can help hesitant consumers with promotions
Consumers across the country have been feeling the financial pinch of the economic recession. And while conditions are steadily getting better, many individuals are still reluctant to open their wallets, which is putting a strain on retail sales. However, there are steps merchants can take to encourage shoppers to visit their stores and websites, including offering promotions. Not only do discounts and deals attract consumers, but these methods also significantly benefit merchants' operations. Therefore, providing promotions is one successful way in which businesses can help both hesitant consumers and their own bottom lines.
Low-income individuals not spending
According to Reuters, many large retailers throughout the country are reporting lower-than-normal sales totals due to recent cold weather and increased payroll taxes. These big-name brands include Wal-Mart, Macy's and Kohl's, among others. Companies have seen their profits drop recently, and many are attributing the decreases to not only frigid temperatures of the past months, but also to lower-income consumers keeping their purchases to the bare necessities.
"We are seeing some weakness amongst our more budget-conscious, what we call deal-hunting, customers," Macy's Chief Financial Officer Karen Hoguet told analysts this week, as reported by the source.
To combat this trend, many merchants are making plans to enhance existing products and services as well as offer new items at better prices, Reuters notes. Analysts stated that consumers are looking for merchandise at decent prices, so if businesses want to capture additional sales and build their customer base, providing promotions is the way to do it.
How do promotions benefit retailers?
When following new strategies, companies want to be sure that not only are their patrons benefiting from the methods, but that their own operations will get a boost as well. This is why many merchants turn to offering promotions, as Business 2 Community notes that these incentives are just the thing both parties need. The source explains that changes in prices within the retail industry over the past few years have led to a rise in discounts and deals. However, providing promotions is done more so for alterations in competitors' pricing instead of consumer demand.
The source states that is not the best strategy to follow, as retailers who take a different approach will be the ones who see the most from their promotional methods.
"To improve profit margins, retailers must begin to think more strategically about promotions, empower their marketing departments and measure the true cost of ticketing," the source asserts.
