2008: the Year of Gifts Under $__ - Holiday Central

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It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Dec.05

3:10 PM ET

Friday, 5 Dec 2008

2008: the Year of Gifts Under $__

Posted By:Cindy Perman

Topics:Luxury Brands | e-commerce | Holiday Central | Economy (U.S.) | Consumers

Sectors:Personal and Household Goods | Retail

Companies:BJ's Wholesale Club, Inc. | Wal-Mart Stores Inc | Coach Inc | Tiffany and Co

Forget Elmo, the iPod and gift cards — all top sellers in years past.

CNBC.com
And the 2008 gift of the year is ... (drumroll please) ... "Gifts Under $__!"

This holiday season, it’s the year of “Gifts Under $__.”

From department stores to day spas, everyone it seems, has a promotion for gifts under a certain price point, whether it's $5, $10, $20 or $50.

And, with good reason: Price is where it’s at this season for penny-pinching shoppers. Forty percent of shoppers said sales or promotion were the biggest factor in determining where they would shop, according to a survey by the National Retail Federation.

“Given the reality as well as the media frenzy about our troubled economy, ‘gifts under’ promotions create a win/win for both consumers and retailers,” said Liz Goodgold, a veteran marketing executive and author of “DUH! Marketing: 99 Monstrous Missteps You Can Use to Learn, Laugh and Grow Your Business.”

“Highlighting or bundling similarly priced goods together allows shoppers to focus on items within their budget. These displays, in essence, narrow down the choices in an era where we are confronted with information overload,” Goodgold added.

Tis' the Season:

And for the retailers, it allows them to lump together like or unlike items, unifying them under a price point that appeals to cost-conscious consumers.

“Many a catalog marketer has struggled with how to combine a Tory Burch purse with a Bobbie Brown lipstick and a Stuart Weitzman pair of shoes,” Goodgold explains. “In this way, the retailer still collects the co-op dollars, but also cross-sells — and even up-sells.”

Retailers have been unusually aggressive early in the season, reaching out to shoppers with special deals even before Halloween. Shoppers were inundated with circular flyers plastered with “gifts under $50” and “toys under $10” as early as November.

The VermontCountryStore.com, which sells everything from figurines to flannel shirts and old-fashioned candy, heeded the call, listing gifts under $30, $50 and $100 before even the popular holiday pitch of “gifts for her” and “gifts for him.”

Furniture and home furnishings are expected to be a tough sell this year — if shoppers aren’t spending as much on toys and sweaters, they’re definitely going to be cutting back on new decorations or big-ticket items like a new sofa.

And it shows on the home page of home-furnishings chain Z Gallerie, which has three big, boxes filled with green and blue holiday décor: One for gifts under $10, one for under $20 and another for under $30.

Luxury is expected to be another tough category but lux retailers aren’t exactly giving in to the discount mania just yet. BUT, they are grouping by price point to make it more enticing. Tiffany.com [TIF Loading... () ] has listing for “holiday gifts $100 & under” on its homepage and Coach.com [COH Loading... () ] has a “By the Numbers” page that groups their handbags and accessories by price point: under $100, under $200, under $300 and over $300.

The Susan Ciminelli Day Spa at New York’s famed Bergdorf Goodman department store, which typically has an upscale clientele, is even marketing its holiday-gift suggestions as “Gifts Under $50,” which includes everything from lotion to candles and even seawater (a natural astringent).

“Typically a luxury brand, our services and products have seen a drastic decline in sales,” a spokesperson said. “In an effort to combat this slump, we are showing potential clients that it is possible to get quality products for less than expected.”

It’s not just chains that are struggling that are appealing to cost-conscious customers.

Wal-Mart [WMT Loading... () ], expected to be the season’s brightest star, announced its plans to discount toys in early October and has a standing link to toys under $20, $50 and $100 at the bottom of its homepage.

BJ’s Wholesale, which has actually raised its outlook, has “gifts for her” and “gifts for him” broken down by under $25, under $50, under $100 and over $100. (Sorry, if you want the RoboMower that’s definitely in the “Over 100” category, clocking in at $1,699.)

“Many of our members have a long list of holiday gifts to buy so it’s important to offer them a large selection of gift options to fit their budget,” said Chris Neppl, executive vice president of merchandising for BJs.

Even reviews are being grouped by price point: In addition to its drop-down menu by product category, customer-review site buzzillions.com (they’re not sure how many a buzzillion is but it sure sounds like a lot) groups gift-idea reviews by price, such as toys under $25 and gifts for him under $100.

“It’s all psychology really in the end,” said Peter Madden, president of branding agency AgileCat. “It’s that little bit of bait that gets shoppers in the store.”

But, he cautioned, deals like this could spell trouble for retailers down the road.

“[W]hen this economy straightens out, I don’t think customers are going to forget all these great deals,” Madden said.

Watch out: The next thing you know, shoppers will be setting their own price points for stars-and-stripes paper plates!

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