What a Michael Kors Bag at Macy's Says About Christmas Sales--Heard on the Street
17 December 2016 - 5:00AM
Dow Jones News
By Miriam Gottfried
Slashing prices can be a sign that a company is struggling to
move its inventory, or a preplanned part of the pricing strategy.
Both are on display as Christmas gets closer.
The rise of e-commerce has spread holiday sales out more evenly
across November and December. As a result, sales aren't as
front-loaded toward Black Friday as they might once have been. That
has made holiday pricing an increasingly complex task as retailers
try to carefully time promotions while still selling some items at
full price.
Evidence of that balancing act was starting to show when Heard
on the Street made our third trip this week to four
bricks-and-mortar stores -- Macy's, J.C. Penney, Ralph Lauren and
Gap -- to check up on the basket of five items we have been
tracking at each of them.
Perhaps the most notable changes occurred at Macy's. The
department store was in the midst of its 30%-off "friends and
family" sale last week and had some additional promotions on top of
that. In a notable reversal, many of the items we are tracking were
selling at full price this week, including some that had been on
sale since our experiment began Nov. 29.
The Michael Kors "Selma" satchel experienced the biggest swing
in price. It was 25% off on Nov. 30 and 50% off on Dec. 6, thanks
to a combination of two different promotions. This week, we found
it selling for full price at $398. In addition, there was only one
of the bags left on the floor where last week they had seemed
plentiful. Macy's said the Dec. 6 price was a planned promotion
that sold "incredibly well." The retailer said its inventory on the
product is now lower, so supply-and-demand economics have led it to
believe it can sell out of the bag at the regular price.
Indeed, the price reversal demonstrates how retailers have
gotten better at managing their inventory and reacting quickly to
an uptick in sales of a certain item or category, according to
Simeon Siegel of Nomura. As long as markdowns are listed on
placards instead of on stickers, they can be easily reversed.
"One of the most negative things e-commerce has done is that
it's given the consumer more visibility on inventory," Mr. Siegel
said. "And it behooves the retailers to benefit from that as
well."
Of course, that nimbleness also means retailers must plunge
further into discounting when the data requires it. The sweater we
have been following at Gap was selling for $25 during our most
recent visit. That is down from $35.97 on Dec. 6 and $41.97 on Nov.
29. The sweater's original price? $59.95.
But all wasn't lost. The sweater didn't have a sticker on its
tag -- yet.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
December 16, 2016 12:45 ET (17:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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