Bargains Trump Brands for Holiday Shoppers

Online jeweler Stauer.com is offering this free necklace on its website in the hopes of luring customers to buy other items. One consultancy is predicting that retailers will have to be prepared to offer bargains this year.

Image: Stauer.com

Retailers who want their share of what is expected to be a small increase in holiday spending are going to have to work for it by offering both discounts and explanations as to why their merchandise is worth what the price tag says it is, finds a study released today.

“The retail brand, and what it stands for, has become a surrogate for added-value,” said Robert Passikoff, president of New York-based brand and loyalty research consultancy Brand Keys. “If retailers really understand consumer expectations and actually know how to address them they’ll see higher profits. Unfortunately, most don’t. Most think lower prices will do it.”

The consultancy predicts that the average increase in consumer holiday spending will be the same as last year: a 3 percent increase with the average customer spending $824 on holiday shopping. The slight increase jibes with the survey’s finding that 70 percent of consumers say the economy is still impacting their holiday plans.

Brand Keys’ survey also found that shoppers are looking for deals before they even look at brands. A full 65 percent said they are already looking for sales, while 60 percent indicated that they are using online shopping and price-comparison apps to find the best deals. More than half (56 percent) say they plan to rely on coupons and customary promotions to keep spending down.

One online jeweler, Stauer, is offering a $249 amethyst necklace for free, provided that customers will pay the $24.95 to have it shipped. While Stauer understands that it will lose money on the deal, it hopes that the giveaway will inspire customers to visit their site and actually shop, the Associated Press reported Wednesday. (The site actually posted a note this morning that it has been “overwhelmed” after the AP story ran and could no longer accept orders online but listed a phone number to call.)

The AP report said Stauer is hardly alone: It also notes that Nordstrom is giving free shipping on all orders, no matter how small and that furniture chain Raymour & Flanigan is letting customers go four years without paying interest on their purchases.

Free shipping and free returns have become an expected perk, Passikoff says, citing the survey. But the study found is that customer service can still be a differentiator for 10 percent of customers who “want more service and an enhanced shopping experience.”

Get more business intelligence from Portfolio.com:

• Five Startup Debt Dealers: Quiet for the most part, these five financial companies and banks are lending billions of dollars to startups across the country.
• Biz Owner: "I'm on Strike": Tea Party activist urges firms to "not hire a single person" until the "war on business" being waged on America by president Obama and the "Democrats-Socialists" is stopped.
• A Spooky Sweet Spot in E-commerce: For the three women behind Chasing Fireflies, coming up with imaginative children's Halloween costumes proved just the ticket to create what is now a $32-million-a-year business.