The post-recession consumer is spending more- but many retailers are fighting for those dollars by slashing prices in an effort to get attention and cash. Bobbi Rebell reports.
Consumers are playing hard to get- so retailers high and low- are pumping up promotions to win over their hearts and wallets. But it's an expensive gambit. Wal-Mart just warned it sees the current promotional mania continuing into the holiday season. Trae Bodge, Senior Editor of RetailMeNot.com: SOUNDBITE: TRAE BODGE, SENIOR EDITOR, RETAILMENOT.COM (ENGLISH) SAYING: "We see a lot of promotional activity. We have become a real promotional culture. Through the recession consumers were looking for more and more ways to save and cut down on their budgets a little bit, and so retailers who offer promotions tend to have a more brisk business more activity in store and online." But retailers who don't play the promo game can wind up losing out. SOUNDBITE: TRAE BODGE, SENIOR EDITOR, RETAILMENOT.COM (ENGLISH) SAYING: "We do see that when retailers pull back and don't offer promotions to the consumer they tend to get punished a bit by the consumer who will go elsewhere to find the best deals." Consumer spending recently hit a 6-year high, with the average consumer spending $98 a day. But companies really have to compete for those consumers. Kate Spade said its gross margins were hurt by intense competition. In other words, it wasn't necessarily that consumers weren't buying their handbags. They weren't buying unless they were marked down. It's often a question of management promotional strategy- says Clear Alternatives Diane Garnick: SOUNDBITE: DIANE GARNICK, CEO, CLEAR ALTERNATIVS (ENGLISH) SAYING: "You are not only looking at quality we are also looking at the quality of management so in that company's specific example, Kate Spade, they ran into a tremendous amount of inventory issues." The job market is improving, but pay isn't going up. So retailers have to work harder to pry open those wallets. LIM College's Michael Londrigan: SOUNDBITE: MICHAEL LONDRIGAN, DEAN OF ACADEMIC AFFAIRS, LIM COLLEGE (ENGLISH) SAYING: "They are not rushing out to buy compulsive purchases, things on the fly. They are really investigating taking their time and making wise decisions." The next test: Back to School- and whether consumers will spend on their kids.