Shoppers Can Say Goodbye to Deep Discounts for Now
Since the recession, many of us have grown accustomed to walking into a store and taking advantage of buying merchandise at 50 and 70 percent off. As consumer confidence continues to improve, however, many retailers are responding by putting an end to the deep discounts.
The flow of goods is also much different than it used to be.
"Stores used to receive goods in August and September. Now, with just-in-time inventories, we have 17 to 24 mini seasons throughout the year," said Dan Butler, senior analyst with the National Retail Federation. "The end of the season markdowns are still there, but the challenge is the earlier groups have been on sale for several months by then, so there isn't much left at the end of the season. So, there isn't as big of a need for those deep discounts."
Markdowns are designed to help clear merchandise that is not selling as quickly as expected or did not sell at regular price, but it is not intended to be the opening price point of any particular garment, according to Butler.
"Retailers put the goods in the stores and rotate them out. They can either send it back to the manufacturer where they get sold at clearance outlets or they might do additional markdowns in the store, but there are a couple of ways retailers can deal with unwanted inventory or items that didn't sell well and not all of them involve markdowns at the store," he said.
Not every retailer goes by the same pricing strategy.
"You really have to learn the pricing at your favorite retailer and you can't assume that one one does, all will do," Butler said. "There are some retailers that never go on sale or they may go on sale two or three times a year. So, you have to shop and compare."
The fact that retailers are getting rid of deep discounts is also a sign that they are betting on the fact that consumers are starting to feel better about spending and will be more likely to open their wallets. In order for this so-called "upscaling" to occur, the economy has to be in good shape.