Thursday, May 21, 2009

DemandTec Offers New Tools To Help Forecast Complex Pricing, Cost Adjustments

Written by Debbie Hauss, Executive Editor

The current economic climate has created an unsteady pricing scenario for retailers. Commodity costs rose and manufacturers passed on the increases to retailers. With pressure from consumers to maintain product prices, retailers are faced with a constant struggle to pay the bills while keeping customers happy.

Noting the retailers’ struggles, software service providers are responding with updates that help to handle multiple costs and better predict pricing changes. For example, “Grocery retailers can now do what-if analysis on anticipated costs in anticipation of negotiating with manufacturers,” says Marc Dietz, VP of marketing at DemandTec. “Having the ability to set up a forecast for a certain time period allows retailers to create a more accurate margin forecast.”

In its most recent quarterly software update, DemandTec responded to customers’ requests for help analyzing future cost changes and improving promotion planning. Retailers currently using DemandTec’s services include Best Buy, Advance Auto Parts, Safeway and Toys R Us. Most recently Price Chopper selected DemandTec’s price optimization solution.

Bringing Categories and Customers Together
With customer-centricity top-of-mind for most retailers today, software solutions can help better match consumers’ desires with product offerings in specific stores. “We are bringing the category and customer perspective together,” says Dietz, “to help plan more effective promotions.”

This approach can improve price optimization as well as assortment optimization. “You can now prioritize how you’re pricing in different markets based on consumer segments,” Dietz notes. And with more localized assortments, retailers will be able to drive more sales to the right customers.

Using these advanced optimization solutions, retailers can expect to see 3-5% margin gains while also growing volume in sales, according to Dietz.

Promoting Retailer-Supplier Collaboration
More and more retailers and suppliers are realizing the benefits of working together to create effective promotions and construct better trade deals. In the last few years DemandTec has facilitated collaborative work between companies like Safeway and Kraft as well as Food Lion and Cadbury-Schweppes. DemandTec connects retailers and suppliers through its TradePoint Network, where its customers have collaborated online with nearly 2.2 million trade deals.

But the retailer-supplier relationship is just a part of the bigger picture of end-to-end promotion management, a process that leverages collaboration and analytics and combines the efforts of many business units including merchandising, marketing and advertising. With end-to-end promotion management, retailers have complete visibility and control over the promotion process, from planning and deal management through in-store execution and post-event analysis.

“End-to-end promotion management helps retailers work with suppliers and manufacturers to plan promotions and execute them across channels,” says Dietz. “The system then follows the process into the store to ensure that the product is available when the customer wants to buy it.”

Having more visibility and control over business processes, including pricing, assortment and promotion management, will help retailers and suppliers survive during recessionary times and thrive when the economy recovers.

Thursday, May 14, 2009

RetailWire:Target Revives Dropped Price-Matching Program

By George Anderson, Editor in Chief, RetailWire

dropped its price-matching program in 2002. That, as they say, was then because now it looks as though the retailer may be on the verge of bringing it back. Target has tested the program in two markets since March 15 and began a third in its own Minneapolis backyard on May 1.

The retailer has been matching lower prices in its competitors' ads at 22 stores in the Orlando area and 28 others in Denver for the past two months. The chain rolled out its "Unbeatable Prices. Guaranteed." program in Minneapolis and Medina earlier this month with the expectation that it will result in a national expansion of the price-matching initiative.

Target believes it has figured out a way to get around the problems it found in 2002. Then, competitor prices were verified at the checkout, causing delays at the front-end. Now, all pricing will be verified away from the checkout at the store's service desk. Delia McLinden, a spokesperson for Target, told the Minneapolis Star Tribune that the program was being retested because they "want to speak boldly about value and low prices and give customers peace of mind."

The Minneapolis/St. Paul Business Journal pointed out in an article that "Target has been ratcheting up its emphasis on prices for the past year, as consumers cut back on discretionary purchases during the recession."

Braintrust panelists emphasize the importance of consistency in Target’s strategy. “Target needs to continue to clarify and reinforce their market position,” says Mike Romano, EVP & Co-Founder, SmartReply Mobile & Voice Marketing Services. “There is room to charge 2%-5% more than Walmart based on overall consumer perception and appeal, combined with specific category superiority--such as in apparel.

If the effort is executed properly, says one analyst, it could be a win-win situation. “Target has the brand equity and by re-committing to the price matching, it further solidifies its brand choice in the minds of consumers,” says Phil Rubin, CEO, rDialogue. “Brands are more important than ever but so is minimizing pricing risk to customers, and Target should get a win-win here.”

Many analysts agree that Walmart will be a big factor in the matter. “Target claims to comp shop Walmart and consistently stay within 2% of its prices, so I'm not sure that the price-matching call-out would be any more effective with price-conscious shoppers,” says Carol Spieckerman, President, newmarketbuilders. “Loyal Target shoppers (especially that defiant group that loves telling you that they won't "set foot" in a Walmart for various reasons) would hardly notice and I can't see price matching having the power to make hard-core discount shoppers migrate.”

Others feel that price matching itself does not make a huge impact. “Price matching is a marketing gimmick,” says Bob Phibbs, President & CEO, The Retail Doctor. “Maybe it adds to perception of being the lowest but how it is implemented at the store level is crucial. For most retailers, matching prices is a loss…Price fairly, give value, train sales people and leave the price-matching to the big boys to slug it out.”

“I'm not sure how important price matching programs are in today's environment,” says Bill Bittner, President, BWH Consulting. “Consumers who are trying to reduce costs have already moved to store brands and there is no way to compare them across retailers.”

Editor’s Note: This article is an excerpt from one of RetailWire’s recent online discussions. Each business morning on, retail industry execs get plugged in to the latest news and issues with key insights from a "BrainTrust" of retail industry experts.

Thursday, May 7, 2009

Economists Suggest Discounting Likely To Continue, Need For New Messaging

Written by John Gaffney
Talk about a tough hand to play. Trying to read the straight flush or straight bluff of consumers is still proving to be difficult for retailers as they do their best with a decidedly mixed collection of cards. Placing the right bets on pricing, ad strategies and overall market positioning hangs in the balance.

“There are some signs that consumer spending may increase and some overall indicators are showing stability,” says Lars Pinder, Professor of Economics at the University of Southern California. “But there are some things on the horizon that could slow a fourth quarter recovery and perpetuate the current strategy of deep discounting.”

Pindar, like most analysts, agrees with the large number of economists who see a modest recovery later in the year. But he believes internet taxes and other miscellaneous sales taxes could hamper the ability of retailers to climb out of the profitless practice of discounting to build some margin back into the business. The great unknown is the consumer psyche. Should retailers be aggressive and play to the recovery with cross-channel convenience, service, selection, and value? Or will consumers continue to be attracted solely by pricing? Unfortunately, price pressure looks like it will outlast any fourth quarter spending recovery.

According to MARC Research’s March consumer survey, 43% of all customers base their purchase decisions on price, up from 40 % in February. And the percentage of consumers who said they were postponing purchases in anticipation of future discounts went up from 33% to 37 % over the same period.

“Several months ago, we were in shock; nobody believed (the economic downturn) was happening. So it was a stress-like reaction,” according to Michael McCall, Ithaca College consumer psychologist.
“Now people are spending less. People are tightening their belts and it is not clear exactly when they will stop tightening and start spending again.”

McCall’s view is echoed by Reuters columnist James Saft who wrote on May 5 that consumers will not be able to sustain the surprising 2.2% spending lift of the first quarter. Consumers, Saft believes, will see the cash from government stimulus but will still face ugly personal balance sheets and a brutal job market. The only reason for optimism is the low level of inventory at most retailers, which will have to be filled and then sold aggressively. This sets the stage for a retail traffic and sales stimulus, but not a return to full-value pricing.

One way to address the fragile retail psyche could be through using marketing to rise above it.

“The problem with retail marketing today isn’t that we spend too much time messaging about the economy. Our problem is that we are all pushing out the exact same message. Can you tell me the last time that almost all brands across all communication channels synchronized on a single key differentiator,” says Melissa Read, Ph.D. and VP of Research and Innovation for Engauge, a consumer psychology consultant. “We see this kind of synchronicity in brand communication on holidays, and it works well in those short durations. But at this point, the message about our failing economy has been over-communicated. Customers are overexposed to it. Brands are supposed to help us escape the issues of daily life. Not remind us of them. When a brand tells you that you ‘need your own stimulus plan’ or that you need to ‘invest in yourself’ you are just reminded of the harsh realities of life today. You are reminded to spend less. If you want to help your customers get over the economy, you need to get over it too. What happened to making people feel like they have to have our products, whether they have the money or not? The best brands show people how their products are relevant to their lives and are essential no matter how much we have to spend.”

Friday, May 1, 2009

New Coupon Applications Emerging As User Base, Delivery Options Increase

Once relegated to housewives in their mid forties with children, the demographic targets for coupons are quickly shifting as new mediums emerge, according to analysts and presenters at this week’s ACP Coupon Conference. “Our data shows the e-coupon user trends a little bit younger and wealthier in line with the demographics of the online adult (versus offline only),” says Lisa Bradner, Analyst with Forrester Research.

New research from Information Resources (IRI) and Platform-A, indicates that 51% of 18-34-year-olds are more likely to use online coupons. While typically ambivalent to traditional coupons, younger couples are the most likely life-stage group to use online coupons, indicating an opportunity to influence product choices within this segment.
With growing and changing demographics comes new ways to deliver coupons, aside from traditional clipping. “The Internet has made coupons ubiquitous, but up until the economic downturn, e-coupons were hampered by the fact that they still needed to be printed out and carried to the store,” says Bradner. “When the economy turns around, we’ll see how much coupon usage drops off. Ultimately, for the FSI to go away, e-coupons will need to become paperless and will need to eliminate breakage.”

“Traditional newspaper coupon campaigns that blanket a region are being replaced by more targeted, cost-efficient online campaigns,” says Fran Garcia, VP Marketing Solutions, “We’ve seen CPG clients bring 20% of their promotional budgets online to, and they’re getting a 15-20% redemption rate vs. 1% with newspapers. Our customers know they can granularly track the entire life-cycle of a coupon – from viewing and printing through redemption – and get detailed demographic information.”

The mobile phone, which has already created quite a stir as a new shopping medium for consumers, is even being exploited for coupon purposes. While the capability to receive mobile coupons is not brand new, it is starting to come to life at the point of sale. By 2013, over 200 million people will receive and redeem coupons via mobile phones worldwide, according to Juniper Research.

Putting Mobile to Work
Starbucks partnered with Codilink to create a loyalty program based on 2D bar-code coupons deployed via SMS. The campaign is currently running in Guadalajara and San Luis Potosi, Mexico. So far, the effort has reportedly boasted a 60% mobile coupon redemption rate. To spread the word, Starbucks created postcards for distribution in malls, universities and retail outlets. The call-to-action urged consumers to text keyword STARBUCKS to short code 80080 to get a WAP link to download a buy-one-get-one-free 2D bar code mobile coupon. The Starbucks locations are equipped with 2D bar code recognition software, so employees can read the mobile coupon directly from consumers’ mobile phones at the point of sale.

“I really like mobile because, from a consumer perspective, it makes a lot of sense, although there are some kinks to work out of the system,” says Bradner. “Loyalty programs offer companies a way to really engage consumers around the coupons and make sure they’re getting some reward for the discount they’re offering. Creating richer rewards for fewer customers is a reward for the brand and for its loyal shoppers.”

Cellfire, a leading mobile coupon distributor, recently expanded its digital grocery coupon program with Kroger nationwide— making its coupons redeemable at the retailer’s 2,400+ stores across the country. Cellfire is also working with Sears, Payless and Best Buy to deliver coupons via the mobile phone. “Marketers use coupons for different reasons: customer acquisition, increase visit frequency or shopping basket size, or the introduction of new products or categories,” says Dan Kihanya, VP of Consumer Marketing, Cellfire. “Digital media allow them to hit the right segments, thereby increasing ROI. It should be noted that the phone allows for time-of-day targeting as well – a unique aspect of mobile.”’s Garcia says retailers should optimize their Web sites for smart phones and have a coupon page directly on the site (like Kroger, Safeway, Kmart, CVS and Walgreens have done) where shoppers can print coupons. Garcia notes that while there’s great potential for smart phones, there are still some technical barriers to be worked out. has partnered with Yahoo! Mobile and recently appointed a former Google Android developer as CTO to bring coupons to smart phones in the near future.

Sandy Spakoski, Director of Account Managing, CPG Sales for AOL Shortcuts, says the platform is appealing for younger consumers who want to use coupons without the stigma. Surprisingly, at the time of Shortcuts’ launch in March 2008, 44% of its visitors were males, for leading grocery chains including Kroger.

Spakoski, who presented trends in offline and online couponing at the conference, says one of the appealing aspects of online couponing is security. “Today there is a large counterfeit couponing problem in the grocery space,” she says. “The thing around online coupons—the safety mechanism that they bring—is that you don’t have a data element for a consumer to see or manipulate characters in any way. It makes it a safer product.” Coupons acquired via Shortcuts do not have a barcode, so the consumer doesn’t have a way to edit it. In its one year on the market, Shortcuts has not had any counterfeit issues with coupons. “As manufacturers think about where to take coupons, safety is something they focus on. Counterfeit coupons cost the manufacturer and the retailer,” says Spakoski.

“The evolution we are seeing is similar to what other markets have seen with the transition from physical media to digital,” says Cellfire’s Kihanya. “The industry is embracing the paradigm shift from broadcast distributions through paper channels to targeted programs with digital delivery. This allows marketers and retailers to more tightly align their coupon campaigns with the goals they are trying to achieve.”

Overall Increase in Coupon Usage
Consumers have transformed from “want” to “need” based amid the volatile economic climate. 66% of the population is needs focused, compared to 17.5% two years ago, according to a study conducted by NCH Marketing, a coupon redemption and tracking agent. “Naturally, the majority (59.4%) of coupon users today consider themselves promotion sensitive shoppers,” says Charlie Brown, VP Marketing, NCH.

Because consumers are focused on price and value, the coupon redemption rate has shown a steady increase in the last four years, according to the NCH Consumer Survey. Brown says there has been a 17% increase in coupon redemption in Q4 2008, and it continues to grow. “In a recession, consumers become more responsive and they’re more interested in saving,” says Brown. “The overall numbers of consumers who have used coupons in 2008 in up 5 share points of the populations. Up to 40% of people that say they would use CPG coupons at one time or another, including in that are people who say they very rarely use coupons.” Brown, who also presented at the Coupon Conference, says the Sunday newspaper is still the largest distribution medium (over 90% of coupons are distributed via the newspaper), because it can reach so many people at one time.

“Marketers need to think: not only are consumers using more coupons right now, but it still comes down to the main purpose of trying to move the product,” says Matthew Tilley, VP Marketing, InMar, a marketing agency specializing in promotion processing. “You’re trying to get someone to try your product for the first time, come back to your product for the second time, or continue to be a user of the product. You have to keep that in mind as your objectives. You need to have the right tactics and offers.” Tilley’s Coupon Conference presentation was centered on the increased effectiveness of coupon promotions.

Compelling Content
Like any other form of advertising, the messaging in coupons needs to be relevant and valuable to consumers in order for it to be effective. Brown says consumers look at the expiration date, the purchase requirement and face value. “ If you’re asking them to buy more than they are comfortable buying to get the discount, that will reduce the overall redemption, but it still will motivate some people and can make a good return on investment,” says Brown.

“If you compare the single purchase coupons to a multiple purchase coupon (buy two, three or more), we will generally see the highest redemption rate out of the single purchase because it’s not requiring the consumer to do something that they are uncomfortable with.” Brown notes that these results vary by category. Multiple purchases can work very well for things like cereal, baby food, yogurt, etc.

Some other suggestions experts offer to make integrate coupon promotions with your in-store marketing include:
Shelf Talkers- could be used to give consumers a reminder to use coupons; provide insight on the savings and value of a discounted product
Digital floor mat- placed in store aisles, this could give consumers product information at the point of decision
Point of Sale Integration- eventually, analysts predict that technology will enable cashiers to simply scan a mobile phone to take a discount at the point of sale. Targeted offers and loyalty programs can also be worked at the point of sale.

“Out of store tactics are great at driving traffic to the store and reminding people to pull them in,” says Tilley. “In-store tactics are good for driving consumer interest to one particular brand or subset. You can have all the in-store messaging you want, but if a consumer is not in your store, it won’t matter. It’s not an either or proposition.” He suggests retailers think about coupons as a strategic marketing effort to attract customers in the first place, with compelling offers to keep them coming.

Friday, March 6, 2009

Kohl’s, Office Max, Best Buy Dominate Advertising Awards At RAC Conference

By Amanda Ferrante

In a year when retailers needed to pull out all of the stops to drive traffic and conversions, the Retail Advertising and Marketing Association (RAMA) acknowledged those who outshined their competitors with innovative marketing with the 2009 RACie Awards, as part of the 2009 Retail Advertising Conference in Las Vegas.

Broken down by advertising medium, the awards recognized retailers who thought outside the box in 2008. Kohl’s reigned supreme with ten honors, most notably for its “Life In Rythym” campaign, which outdid its competitors in the newspaper, outdoor, TV spot and multimedia categories. Kohl’s “Simply Vera by Vera Wang” campaigns also made waves in the magazine, private label and multimedia sectors.

Best Buy was a top player thanks to its “BlueShirt,” “Geek Squad” and “True Stories” campaigns. The electronics retailer dominated the digital interactive and multimedia categories and took home silver honors for innovation. Best Buy was also awarded the top honor, the Peter Glen Award for Community Service for its BlueShirt Corps Cause Marketing Initiative.

Office Max’s “Elf Yourself 2009” campaign brought back the laughs in the digital interactive and digital media Web categories. The office supply retailer kept the humor in full swing with its “Back-to-School Penny Pranks” TV spots earning Gold honors in the multimedia category. Office Max also earned silver honors in the private label packaging category for its 4WRK brand, and took home bronze honors for innovation for its “Fashion Week Lounge.”

Walmart and JC Penney were each acknowledged with three honors—Walmart for its Christmas TV spots and JC Penney for its digital interactive promo, gift card innovation and “Back-to-School High School” TV spots. Target earned recognition for its innovative gift cards, one that doubles as a digital camera and the magic gift box gift card. The Target GO International campaign won bronze honors in the digital interactive category.
Other winners in the TV single spot categories include The Home Depot for the “It’s Time” Olympics commercial. Circuit City’s “Mixed Signals” spot earned recognition, as well as Build-A-Bear Workshop’s “Wish” spot. The single media print campaign category honored Saks Fifth Avenue for its “Great Gifts—the Conundrums campaign, as well as Toys “R” Us for its holiday campaign.

A detailed look at this year’s winners is available via the RACie Winner’s Book, an interactive guide to the top campaigns in retail.

Thursday, February 19, 2009

Professor Tom Davenport Advises Retailers To Cultivate Potential Benefits of Analytics

By Debbie Hauss
Industry experts and retailers themselves agree that most retail companies have not yet realized the full potential of the breadth of analytics available to them today. Economic climate aside, retailers must strategize for long-term success, and using analytics effectively can go a long way to creating security for businesses on the other side of the economic recovery.

Recently SAS and Teradata commissioned a study on analytics along with Tom Davenport, professor at Babson College and co-author of the book “Competing on Analytics.” The original plan for the study was to focus on specific themes related to analytics in retail, but Davenport quickly found out that first the industry needed to take a step back and evaluate all possibilities and potential retail analytics could provide. The recently published study is titled “Realizing the Potential of Retail Analytics.”

“I was surprised by the huge potential of retail analytics and the breadth of opportunities retailers have to choose from,” says Davenport. “But I was equally surprised at the lack of coordinated approach coming from retail businesses. It was difficult to find one person in retail who could speak to the broad range of analytical activities.”

Learning from the Best
During interviews with 33 retailers and more than 25 retail analytics experts, Davenport noted that the same companies came up over and over again when discussing best practices. Companies like Best Buy, Walmart, Target, Kohl’s and JCPenney have taken the lead in developing successful processes using specific types of analytics. But, he notes, none could speak to the complete realm of analytics resources.

Overall, Davenport found that “the companies that have aspirations to be big and successful are focusing most closely on analytics, including department stores, online retailers, and probably most of the large discount retailers.” But most retailers today are realizing the potential benefits of analytics, and some have very recently changed their outlook regarding analytics. “A few years ago I did some work with TJX and at the time they said: ‘We are traditional merchants and are not sure analytics relate to kind of merchandising we do.’ But they are not saying that anymore.”

Making the Best Analytics Choices
Given the breadth of choices available, and the fact that most retailers don’t have a huge amount of money for investment today, making the right choices is critical, says Davenport. He suggests that the first key step is to understand your company’s business strategy.

Ask the question: “What are we trying to accomplish as an organization?” For example, a number of analytics applications relate directly to understanding the customer, knowing what products they buy and developing a detailed understanding of what they want to purchase in the future. “Those applications make the most sense for organizations that have customers who spend a lot with them, have relatively high margin products and can afford to invest a lot in learning more about their customers,” he notes.

Other companies might want to focus their analytics choices elsewhere. “A discount retailer might want to focus on assortment planning or pricing optimization – two applications that deliver a quicker ROI.”

Retailers also can learn from their peers when making decisions about implementing analytics. “Today, everybody in retail should consider themselves in multichannel environment, and therefore should look at the leaders in that area such as Amazon and eBay. Those organizations are doing extensive testing, using lots and lots of web analytics, and collecting product recommendations.”

Outside retail, retailers could look to other industries for best practices. “The credit card industry has done a lot in looking at customer behavior,” Davenport notes. “And banks, Capitol One for example, have been very aggressive in the use of analytics and testing. Additionally, the travel and transportation really pioneered a lot of the pricing analytics.”

The 18 Most Common Analytics Applications
Taking an almost encyclopedic approach, Davenport constructed a list of 18 common analytics applications in his report. In explaining each application, Davenport notes best-practice retail examples. The list is separated into three distinct categories:

Widely Adopted Analytics Processes
1. Assortment Optimization and Shelf Space Allocation
2. Customer-Driven Marketing
3. Fraud Detection and Prevention
4. Integrated Forecasting
5. Localization and Clustering
6. Marketing Mix Modeling
7. Pricing Optimization
8. Product Recommendation
9. Real Estate Optimization
10. Supply Chain Analytics
11. Test and Learn
12. Workforce Analytics
Organizational Trends
13. Adoption and Use of Analytics
14. Analytical Ecosystems
15. Centralizing Analytics
16. Store-Level Empowerment
Strategic Initiatives
17. Analytical Performance Management
18. Multi-Channel Analytics

Looking to the Future
While many retailers are still getting their proverbial arms around the current analytics options, they also should keep their eyes on what’s coming down the road. Davenport notes five future analytics trends to watch:

  1. Clienteling. “I think if you’re Brooks Brothers, Nordstrom or Nieman Marcus, you already are doing clienteling to some degree, but you going to use analytics to determine product selection in the future. This could be a relatively minor application to add.”
  2. Video Analytics. If you’re really into fraud detection and shrinkage prevention, soon it will be possible to analyze video in that way, “but first the industry must wait for the vendors in this area to mature a bit.”
  3. Sentiment Analysis. “It could be cool to know what customers are thinking about a particular fashion line and could help retailers select styles for fashion-oriented goods. I don’t expect this application to take off soon, though.”
  4. Demand shaping analytics. “We are not that far away from this. Companies are already doing a lot of supply chain, pricing and assortment optimization. Once they get these systems connected they will be able to perform advanced demand-shaping analytics.”
  5. Real-Time Offers. “This is already happening a fair amount in online and people in other parts of world are doing it with mobile technology, but the U.S. is lagging the world here. More and more of mobile phones are capable of transmitting proximity information, so I think it’s probably not that far off. We could easily see that a particular carrier and technology manufacturer (AT&T and Apple, for example) could partner to ask customers if they would like to be notified of deals they would be interested in when they are physically within the proximity of a retailer.”

While Davenport began the study before the most severe economic downturn, he hopes that retailers will continue to invest in analytics. “It is pretty clear that the really great, well managed companies continue to invest in analytics, even in a down economy.”

To access the complete study, go to

Thursday, February 12, 2009

Valentine’s Day Promos Show Love For Innovation Beyond Price Discounts

With Valentine’s Day spending projections down to $102.50 from 2008’s $122.98 figure, according to NRF, retailers were looking to spread the love and get consumers out spending. While some analysts expressed concern that too many retailers continued to pull the discounting lever, there were some signs this holiday that retailers are getting more creative with cross channel promotional offers that may shore up the broken pricing levees.
“Consumers have different perceived values and emotions for their loved ones, and marketers should try to better understand these differences and promote to consumers' emotions rather their wallets,” says Yoram Greener, Senior Director, DbM Consulting, Merkle. “Marketers need to realize that every promotion is an opportunity to build relationships with their consumers. Having said that, retailers need to look deeper into customer preferences and reactions to be successful. Competition on price is a dangerous value proposition, since you end up commoditizing your value proposition, rather build relationships.”

Although holidays such as Valentine’s Day and Mother’s and Father’s Day, represent smaller revenue opportunities compared to the fourth quarter, industry experts suggest they are a missed opportunity to engage with new customers. “Our research shows that when it comes to these holiday gift-giving opportunities, retailers really focus primarily on the fourth quarter, but they are missing the day in- day out opportunities you have with birthdays, anniversaries and smaller holidays that come around,” says Pam Danziger, president of Unity Marketing. “They don’t realize that gift-givers actually spend more money throughout the year for those occasional holidays than they do in total at Christmas time.”

Retail TouchPoints found the following bright spots for Valentine’s Day from the Valentine’s promotional landscape:

Tiffany’s nurtured last-minute shoppers by offering complimentary shipping and guaranteed Valentine’s Day delivery for customers who order online by noon today. In addition, the jeweler offered complimentary engraving in-store and online on select items Feb 2-9. While the company has a long standing policy against price promoting, they are thinking outside the little turquoise box to offer shoppers something different, while catering to customers by offering a personal touch.

Talbots, playing off the pessimistic consumer mindset, asked shoppers to share their worst Valentine’s Day gift ever on the retailer’s Web site. The grand prize winner gets a $1,000 Talbots wardrobe and a trip to NYC for a shopping day with Chief Creative Director Michael Smaldone. Second and third place winners win $500 and $250 Talbots gift cards.

“What I really like about [the Talbots promo] is that it encourages customer involvement,” says Danziger. “That’s the hook. It’s not the 20% off, but it makes the customer respond and become involved. It provides a platform of involvement and relationship with the customer that makes it so much more meaningful than simply buying a product or getting a discount. That’s making the connection.”

Sears is playing on the Valentine’s Day theme to sell some decidedly unromantic products. Its “Love this Sale,” which offered no payments or interests for 12 months on appliances over $300 with a Sears card, plus free standard delivery and haul away after Mail-In rebate.

“Most retailers define ‘loyalty’ as ‘market share,’” says Mark Lilien, consultant with Retail Technology Group. “True loyalty is defined as ‘price independence.’ It's the difference between Dell and Apple. For Valentine's Day, the best thing any large retailer can do: have merchandise of superior design not available elsewhere. For small retailers, have an assortment that's unlikely to be duplicated nearby.”