Retailers rely heavily on promotions in Q1

Retailers are relying heavily on discounts and promotions early in 2016. The trend is continuing from the 2015 holiday season, according to the "DynamicAction Retail Index: Spring 2016."

In the first quarter, retailers sold less at full price versus a year ago, with full-price sales down 4 percent and orders using a promotion up 63 percent. Specifically in March, data revealed an 86 percent increase in orders using promotions compared to 2015.

Conversion of first-time buyers into second-time buyers was also tough, down 6 percent to the previous year.

However, revenues were up 10 percent in Q1 versus the same quarter in 2015. Retail profits were up an average of 5.2 percent, most of which occurred in January, leaving a volatile February and March.

In fact, according to the Verizon Retail Index, the first weekend in January 2015 generated the highest online shopping traffic volumes since the start of that holiday shopping season. Traffic surpassed Black Friday weekend, Super Saturday weekend and the day after Christmas weekend.

"The antiquated strategy of retailers relying exclusively on their promotional calendars to run their operations has fostered an ingrained need for discounts by consumers, who are increasingly being trained to wait for promotions or discounts prior to making a purchase," said John Squire, CEO and co-founder of DynamicAction. "The very best retailers are preparing right now to answer customers' needs and beat shareholders' expectations during the holiday season of 2016, by focusing on curbing the promotional addiction and utilizing their full data set to better manage inventory and operations."

Consumers are always looking for a bargain, whether shopping online or in-store, but it seems that a lot of retailers are now offering their biggest discounts in digital form. According to a recent Anthem Marketing Solutions study, lower pricing was more prevalent online than in-store, 72 percent of the time versus 28 percent respectively. These results can be attributed to the fact that digital coupons tend to be applicable to the entire purchase basket rather than individual items.

For more:
- see this DynamicAction press release

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