Miriam Gottfried/The Wall Street Journal
Dec. 16, 2016 12:33 p.m. ET
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. 29 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 [email protected]