When Every Day Is a Sale, Stores Struggle to Catch Shoppers’ Eye

(Bloomberg) -- Levi Strauss & Co. Chief Executive Officer Chip Bergh remembers when back-to-school shopping was a one- or two-week thing. Now, it seems to go on forever.

“Back-to-school used to be a moment,” Bergh said, recalling the briefer periods of yore “where it was like a fistfight in the stores.” Today, “it's morphed into five weeks.”

The prolonged back-to-school season mirrors what's happened with other annual sales events, as retailers drag out the moments that bring shoppers in the door as long as possible. Black Friday, still the kickoff for the crucial year-end period, is now followed by the online deals of Cyber Monday -- but the lion's share of holiday sales come in discount-fueled December.

Even Prime Day, the mid-summer event invented by Amazon.com Inc., has been stretched to encompass two days, with competitors extending their promotions on the front and back ends.

‘Over-Promoted'

For apparel chains, this often means that sales bleed into each other, and companies struggle to get shoppers excited for the next round of discounting before the current one has ended.

“Everything is so over-promoted these days,” said Craig Johnson, president of Customer Growth Partners LLC. “People can be promoted out. They get bored with it.”

The endless sales have changed shoppers' attitudes, with many now expecting discounts available at any given moment, rather than at designated times of the year.

“Consumers are numb to all the promotional activity,” Levi's Bergh said. “So a 20% back-to-school offer is no different than whatever is going to happen in early September, when it's going to be 20% off anyway.”

This is forcing retailers to manage their inventories more nimbly and keep the pipeline of new products flowing so the selection feels fresh for shoppers who visit several times during any given season.

The stakes are high to get it right: This year, American parents are expected to spend $507 on average for clothing, electronics and other school-related items, according to a study from RetailMeNot. That's up from $465 in 2018. Deloitte, meanwhile, sees back-to-school spending for kindergarten through 12th grade totaling $27.8 billion this year, a rise of 1.8% from 2018.

Juggling Inventory

Failing to move product quick enough can be detrimental for retailers -- piled up inventory erodes profitability because it costs money to store and organize it, and companies have to discount deeply to get rid of it. Both Gap Inc. and J.C. Penney Co. have gone through costly buildups of inventory in recent years that required markdowns to clear up.

“You want to get rid of it and then you want some new product coming in,” Johnson said. “You don't want to keep selling the same stuff that you've been selling for two months.”

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American Eagle Outfitters Inc., whose namesake brand caters mostly to teenagers and young adults, is seeing shoppers opt for multiple trips to the store per season instead of just one, according to Chad Kessler, the company's global brand president. Part of it is driven by peer pressure.

“Kids go back to school, see what the other kids are wearing and come back for something new,” Kessler said.

Levi's Bergh echoed that sentiment. “A lot of the kids want to wait until they see what's hot on Instagram and what the cool kids are wearing when they go back to school,” he said. “They can defer that purchase and wait until they really know what they really want.”

With repeat back-to-school shopping visits becoming the norm, that means “making sure that we have delivery every month, so every time the customer comes back, they have something new,” Kessler said.

New Tactics

To stand out amid the crowd, chains are trying new tactics -- such as turning to the kids themselves for inspiration.

Old Navy, the off-price apparel chain owned by Gap, is selling T-shirts featuring drawings by 8-to-12-year-olds. American Eagle recently formed a “council” of young adults that was created, in part, to help guide its product selection this year. On their recommendation, the chain now stocks a larger range of sizes in its stores. J.C. Penney, meanwhile, is offering $10 haircuts for elementary and middle school students.

Johnson, of Customer Growth Partners, said the key to success is for retailers to have a detailed understanding of their customers.

“If you're an apparel retailer, you want to make sure you're in tune with the styles,” Johnson said. “If you place too big a bet and nobody's buying it, then you can get hurt.”

To contact the reporter on this story: Jordyn Holman in New York at jholman19@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder, Lisa Wolfson

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