Some retailers are reportedly reexamining their promotional strategies to stave off a muted holiday season.
“The depth of those promotions, the frequency, all of those things, are areas where we have been much more surgical,” he said. “We’re not taking a blunt approach.”
The report also noted recent comments from Bath & Body Works that while it doesn’t expect to be more promotional during the holiday season compared with last year, it is using data to hone its promotional strategy.
“We are always testing,” CEO Gina Boswell said during an earnings call.
The news comes amid recent economic data that suggests consumers are feeling increasing pressure. October’s government consumer spending data showed retail and food service sales falling for the first time in seven months. Department store sales were down 1.2%, while eCommerce sales remained flat month over month.
And this data lined up with warnings from two mammoth retailers about a slowdown in consumer spending.
On Walmart’s earnings call, management pointed to the softening of consumer spending in October (which led to cautious guidance for the remainder of the year).
“You’ve got the repayment of student loans, which affects about 27 million Americans,” CFO John David Rainey said. “All of these things could be contributing” to the slowdown.”
Target CEO Brian Cornell noted that “overall, consumers are still spending, but pressures like higher interest rates, the resumption of student loan repayments, increased credit card debt, and reduced savings rates have left them with less discretionary income, forcing them to make trade-offs in their family budgets.”
And if they’re not making trade-offs, consumers are looking to make purchases more affordable with buy now, pay later (BNPL) plans.
PYMNTS Intelligence has shown that 16% of American consumers — or 40.5 million people — used BNPL over the past several months. The data showed that 16% of BNPL users made purchases using the option at least weekly, while another 25% did so monthly.