Retailers offered more deals in September – a final effort to lure cautious consumers?

Posted on 30 October 2008 by Loch RoseNo Comments

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ShopLocal hosts the online version of the weekly print ads for many of the top U.S. retailers. These ads are a major merchandising vehicle for these retailers, and they rely on them to bring shoppers into stores. Retailers are practiced and sophisticated in their use of these vehicles, often creating literally hundreds of different geographic versions of them in order to match the buying preferences of their local customers, and in some cases creating Spanish versions as well.

ShopLocal’s database contains a history of these ads, which we can use as an indicator of the level of merchandising activity in retail. It can tell us a lot about how retailers are choosing to connect with their customers. The specific measure we will use is the average number of offers per store; the average will be weighted by retailer ACV (All Commodity Volume, i.e. total dollar sales), which means that retailers with higher sales and more stores will be weighted more strongly in the calculation.

The first chart shows the overall monthly pattern since January 2006. It shows seasonal highs during the holidays and during the spring, followed by seasonal lows in January and July.

The next chart shows the year-over-year trend by month. More up months than down, and it actually picked up in August-September of this year after a slow spring and summer. No sign of a pull-back in merchandising by retailers just yet.

Taking it down to a lower level of detail, by retail segment, shows that the number of offers has grown pretty consistently in the Consumer Electronics, Computers and Office Supplies segment:

Meanwhile, the Department Stores and Mass Merchants segment has been strong since March of this year:

While the Food and Drug segment is shows consistent but relatively slow growth:

And the Home and Garden segment has shown a significant decrease for most of the year, coming back to a nearly flat trend in August and September:

Focusing in on September, the final two charts show that Department Stores and Mass Merchants have both the largest number of listings per store – not unexpected, given the breadth of their product offerings – and also pretty much the strongest growth, which means that this segment was by far the main driver of growth in September. (The “Other” segment includes most specialty retailers, and is significantly smaller in terms of total sales than the others.)

With continuing caution by consumers, did the retailers – particularly the Department Stores and Mass Merchants – get the response they want from the deals they offered in September? They offered consumers a lot in September, and according to the U.S. Census Bureau’s estimates of retail sales, the consumer did not respond. October’s results, coming up next week, will show how the retailers reacted.

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