Are Firms Now Smarter About the Customers to Target with Discount Offers?

15 Jan

We know that many shoppers regularly look for discounts, and typically won’t make many discretionary purchases without them. But, there are also shoppers who often buy without looking for a sale. Through their access to big data, a growing number of firms are learning to better target their discounts.

As Shelly Banjo reports for the Wall Street Journal:

“There’s a growing gap in retailing between those who get discounts and those who don’t. Retailers such as Stage Stores Inc., which runs 880 department stores, including the Bealls and Goody’s chains, are starting to pare back the promotions by showing them only to customers who respond to price reductions. At the other end of the spectrum, Stage Stores has shoppers who are more interested in nabbing the newest styles in shoes and handbags than in sniffing out bargains. Stage Stores rarely advertises clearance sales to them.”

“After years of collecting data, retailers have gotten savvier about how to use it. They are trying to maximize full-price sales to fatten profit margins, while using discounts to clear aging inventory and persuade reluctant shoppers to part with their cash. A fifth of online shoppers are considered true ‘discount junkies,’ people who make purchases only when plied with discounts, according to new data from AgilOne Inc., which works with 150 retailers to analyze customers’ purchases and predict their behavior. About 15% of shoppers generally pay full price for items and don’t bother searching for sales.”

Click the image to read more of Banjo’s story.
 

Shoppers such as these at Nordstrom Rack in Schaumburg, Illinois, look for bargains. However, discounts don’t excite all shoppers. Photo: Nam Y. Huh/Associated Press


 

One Response to “Are Firms Now Smarter About the Customers to Target with Discount Offers?”

  1. Henan Hou (Hester) March 29, 2015 at 9:01 pm #

    The retailing strategies definitely should be addressed accordingly based on the analysis of customers. There exist particular segments of consumers with different income levels and consuming behaviors. For high-end products, retailers should implement certain strategies to attract those customers who care less about the prices. For those consumers who are price-sensitive, retailers should implement discount strategies to satisfy their feelings of getting good deals.

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