The Perpetual Sale Addiction of Department Stores

March 10, 2012
By: Reurbanist

With my office located in the Hudson's Bay Centre at Bloor and Yonge in Toronto, my moments of procrastination invariably turn into visits to the monolithic department store located beneath me. These walking tours have given me ample time to study The Bay’s seemingly perpetual sales, waiting months for the optimal moment to swoop in for the ultimate deal. As typical with males, my coworkers and I have turned this into a form of competitive sport which at times seems more like strategic piracy than leisurely shopping trips.

However, it begs the question - do people ever buy full price merchandise at The Bay? On one recent groggy morning I arrived at the office in suit and tie, but lacking a belt. Without having the luxury to patiently stalk my merchandise for months waiting for the best deal, I headed downstairs to purchase a belt at… full price; the ultimate competitive shopping defeat. The helpful sales associate commented to me as I was making my shameful purchase: “are you aware that this item is not on sale?” I quietly snuck back into my office and sulked at my desk.

Reading Brannon Boswell’s article, “Penney saved” in this week’s Shopping Centres Today, it appears I am not as abnormal as I thought. JC Penney’s CEO, Ron Johnson was quoted saying:

Department stores have become about promotions and not about branding. We had 598 different promotions last year. They look desperate, and they confuse the customer.

Effectively, JC Penney is stuck in a perpetual sales loop. An incredible 75% of their sales last year relied on discounts of over 50%. I can only rely on my personal observations, but it appears JC Penney is a full blown sales-addict, while Canadian department stores are more of a recreational user. Perpetual sales mean that on average, JC Penney’s merchandise sells at a 40% discount. Ron Johnson plans to simplify their marketing by removing perpetual sales and implementing everyday prices that are 40% lower across the board.

How would this idea play out if implemented at department stores in Canada? There are signs that The Bay and Sears are trying, to a degree, to wean themselves of their habit. With Target’s arrival just around the corner, is the solution for department stores to adopt an “everyday low prices” model? I’m not convinced it’s as easy to implement as Ron Johnson makes it seem in his interview. There are thousands of customers like myself who buy into the perpetual sales addiction, and weaning us off without losing us will be a long and risky process. Anthropologists like to compare shopping today to hunting of the past; it’s a human instinct to chase and kill handbags with our credit cards. The challenge for department stores moving forwards will be to find a way to maintain an element of this excitement, while convincing us it’s not such a shameful thing to buy full price merchandise.

About Reurbanist
Reurbanist™ believes retail offers cities the best opportunity to recreate their urban fabric.

Developers, investors and governments around the world are recognizing how retail offers enormous opportunities. Retail is the glue which holds communities, neighbourhoods and mixed use developments together.
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