Retail stores, during this shopping season, are facing a dilemma: Set discounts or hold the line? Wall Street Journal (WSJ) reports that 90% of the shoppers surveyed are waiting for

Shoppers want more. Stores are holding tight.

at least a 50% discount and 33% are looking for a 70% discount. This weekend seems to be crucial with just 2+ weeks to go before Christmas. Retailers are trying to avoid deep price cuts using carefully planned promotions and limited inventories. However, if the shoppers stay put until they see the deep discounts, then retailers have no way but to blink first.

Consumers, with their tight budgets, have learned over the past 18 months that retailers need to clear store inventory and will cut prices, especially during peak-holiday season and so the extra discount is worth the wait. Retailers are no slouch either and are quickly moving to change prices. During Black Friday, Aeropostale offered 50% – 70% of all its merchandise, switched to item-specific promotion last weekend, but on Thursday reinstated the blanket discount.

Now, the survey data is specific about offline retail stores however, the same challenges extend to online retail too. I strongly believe that this is where retailers, who use email as a marketing channel have an advantage over direct mail in that they can quickly measure and act:

• Focus on targeted campaigns based on segmentation variables such as past purchase behavior, campaign responses, loyalty, and other metrics
  

  A lone shopper at a Memphis department store

• Hone in on those customers, who are likely to respond better to your offers and seek them out little bit more aggressively.
• Optimize campaigns by offering different promotional combinations
• Given that prices are likely to head south, two crucial decisions that an email marketer need to make are (a) not to send a reduced offer to a customer who recently purchased the product & (b) how to deal with the situation when a customer, who got a whiff of the lower deal calls you. Truth is, this is a challenge a marketer has to face – online or offline.

P.S: This post is based on an article that appeared on Wall Street Journal newspaper on Dec 11, 20009. Image credits: Wall Street Journal.