As the holiday season chugs through its traditionally slower period following the Black Friday rush, retailers are pulling out all the stops — even Fiat giveaways — to drive consumer traffic to brick-and-mortar stores.
"We have seen a big focus for retailers doing everything they can to generate more traffic in the stores," said Dana Telsey, the CEO and chief research officer at Telsey Advisory Group.
This includes offering services and events that give consumers a reason to step into stores, extending store hours and giving loyalty customers a higher priority than others, Telsey added.
Additional traffic not only results in purchases of what customers initially intended to buy but sparks impulse buys too, which are crucial for driving sales.
Boosting traffic and sales now also pushes some sales forward during the 32-day long holiday period, the longest possible stretch between Thanksgiving and Christmas.
"Getting the customer now, there's more of a chance that there's not as deep of a markdown in the 10 days before Christmas," Telsey said. "It's a more profitable sale than it would be two weeks down the road."
To lure customers, Gap-owned Banana Republic launched its "12 Days of Joy" campaign on Dec. 1, which features a different surprise each day, including complimentary makeup, movie vouchers and chocolate interspersed with days featuring steep discounts. As part of the company's last giveaway, consumers will have the chance to win one of six Fiat vehicles.
Meanwhile, Starbucks' announcement that it would sell 5,000 steel gift cards at a non-so-bargain price of $450 generated buzz just days after it launched its "12 Days of Gifting" campaign of discounts and promotions. Day 3's offer of free coffee throughout January with each purchase of a specific $30 tumbler will serve as a way to boost foot traffic after the holiday rush dies down.
Despite accusations that the company was catering to the caffeinated 1 percent, the cards sold old in seconds.
Deutsche Bank analysts surveyed more than 50 stores across the country and visited a handful in the Northeast Corridor and said Target associates commented that they thought the collection's pieces were too expensive and could last through early January when the time frame for returns ends.
"Unfortunately, for Target, the results were very similar across the board, suggesting the hyped collection is indeed off to a much worse than expected start," analysts wrote in a recent report.
A Citigroup research report cautioned investors against believing the collection's hype.
"The collection was tucked in the back of the store, shelves were full and messy, and we saw little traffic," the report said.
A separate report from JPMorgan mentioned that a Westchester, N.Y., Target employee was already "seeing some returns, perhaps implying that the collection saw a high number of early purchases for resale in anticipation of being sold out, but given product availability resale opportunities are limited." Indeed a search on eBay for the collection's items returned nearly 2,000 items, mostly at steep markups and many without bids.
Overall though, retailers' attempts to drive traffic during the typically slow two weeks following the Black Friday rush appear to be working. During the week ended Dec. 1, ShopperTrak Founder and Executive Vice President Bill Martin said sales and traffic ticked up from last year.
"After Black Friday, we run into a two-week trough where consumers kind of go to the side lines and are going to wait for the next round of promotions," Martin said. "So that has occurred, but the trough is not as deep as it was last year. In fact, we saw an increase over last year in foot traffic of 3.7 percent and a 2.3 percent increase in sales."
This is good news for retailers as they seek to counteract a weaker-than-expected increase in same-store sales in November due to Hurricane Sandy.
"We think that's a sign of a resilient consumer, and we would expect that to continue," Martin said.