Retailers will be rolling out the usual holiday sales this July 4th weekend, but the effort may be aimed more at holding onto existing customers than boosting sales.
AP
July 4th has become a major promotional opportunity for retailers, especially discount chains that are constantly fighting for consumers’ business, says Howard Davidowitz, chairman of Davidowitz and Associates.
“I think the sales will be flat," Davidowitz predicts. "And without the promotions, they will be down substantially.”
The problem, he explains, is that retailers face losing customers to another store if they don't offer sales.
“The bottom line is it’s a battle for market share,” he says. “Retailers don’t want to lose sales momentum.”
Promotions don't necessarily help the bottom line, however, so some retailers have to weigh whether it's worth the cost.
“There may actually be fewer [promotions] since retailers have generally cut back on promotions due to the recession and downturn in business,” says George Whalin, CEO of Retail Management Consultants.
Retailers such as Wal-Mart will have an advantage in this economic landscape, says Davidowitz.
Wal-Mart is the largest food retailer and seller of patriotic merchandise. The average family at its stores has annual income of $43,000, which makes low prices and value promotions important for increasing its sales.
“They make big dollars on food, patriotic merchandise,” Davidowitz says.
But most retailers are feeling the impact of Americans who still aren't spending much.
“The consumer has been a little shy this year,” says Mike Gatti, director at the National Retail Federation’s marketing department. “We’ve seen ups and downs in spending and consumer confidence has taken a dip lately.”
So the biggest beneficiaries will be stores selling the necessities.
“With Americans still spending time close to home during the recession, they will most certainly spend a great deal of money the next few days in supermarkets and other stores selling the things they need for picnics, cookouts and barbecues,” says Whalin of Retail Management Consultants.
Whalin says home and garden centers such as Lowe's and Home Depot and outlet malls might also see an increase in traffic.
“As for outlet malls, they have actually been doing pretty well throughout the recession,” Whalin says.
The Mills, an outlet mall operator owned by Simon Property Group, is doing July 4th promotions at all 17 of its retail centers around the country.
In an attempt to attract more travelershitting the road this weekend, The Mills is offering chances to win trips to different mall locations as well as the usual savings at the retail stores.
“We want to help our retailers,” Kelly Mikesell, spokesperson for Simon Property Group said, “They are great partners with us.”
Promotions, though, have become almost a necessity to keep customers coming in.
“The name of the game is not to lose your market share even if it costs money to keep your customers coming back,” Davidowitz said, “Your priority as a retailer is to have those footsteps.”
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