Notwithstanding the gimmicky approach, I’m sure Fred’s pricing concept will appeal to some shoppers. It’s hard to say whether the formula will scale, I suspect not. The trick to doing treasure hunt well is having a ready and reliable supply of merchandise — if Fred’s and other retailers can keep the product offering fresh and compelling, they will have a market.

This is a treasure hunt on steroids! Consumers have demonstrated their love of the treasure hunt and it has been very lucrative for off-price, discount and dollar stores. This progressive discount approach brings in a new element that turns the treasure hunt into a game of strategy for consumers. “On which discount day will I shop or will I shop multiple days to watch the quantity of an item I want, to make sure I buy it before it is gone?”

It is also a strategic “game” for the retailer, as they have to factor in what the average discount percent will be each week to ensure they price products accordingly to remain profitable. It will be interesting to see how this plays out for Fred’s and if other retailers jump on this bandwagon.

The concept of a treasure hunt is not a new one. One difference here is that they are being more overt about the idea and promoting it as a reason to come into the store and buy now. If the economics hold, this could be a meaningful differentiator for them, as long as the merchandise is of quality and shoppers don’t get sick of them ALWAYS promoting.

This sounds like the old Filene’s Basement concept of automatic markdowns over time!

It creates a game of cat and mouse between consumer and retailer and introduces some tension into the buying process that encourages purchasing and makes customers check back regularly.

While the concept works for a discount retailer like Fred’s, I doubt many other retailers will follow suit. There is too much work involved in marking down products and many mainstream consumers dislike constantly changing prices.

Often, unconventional promotions fizzle out when the reality falls short of the vision. This is an intriguing idea easily understood by consumers that can work if Fred’s gets two things right:

1. It needs a well-curated mix of products with different perceived values that keep traffic coming at each price point throughout the week;
2. It needs to be promoted and tested well enough and long enough to get noticed, gain traction, and sustain a viable stream of customers.

I suspect this will be a big hit with consumers. Shoppers have proven that the treasure hunt is a desirable activity that becomes a social currency as they brag about what they were able to get a deal on. Also, there is no promise of anything being in stock (after the first hour of so of opening) so Fred’s can eliminate that headache and can create a sense of scarcity with the most valuable items.

Absolutely. Some people need to save money while shopping, but everyone likes to save money. Fred’s Closeout Bonanza is both a closeout and a bonanza. Plus, the nature of the pricing strategy will tend to generate multiple visits as customers seek their optimal price for items being followed. In addition, you can expect that while they are in the store updating their research, they may tend to buy additional products that are unplanned.

In essence, Fred’s concept is similar to the treasure hunt phenomenon pioneered by Costco. Get it now or forever miss the opportunity.

As far as other retailers are concerned, if they are carrying excess, dated merchandise they should make it a fun event to unload it.

There is no doubt that there will be a market for Fred’s Closeout Bonanza. Sheer curiosity is enough to get customers through the door, but is it sustainable?
Without having insight into the economics I can’t say whether it would make sense for other retailers — or Fred’s for that matter — but it certainly would not make sense for any company selling their own brand of goods, the devaluation is too intense. I wonder how Fitbit, Mr. Coffee and other companies whose brands are being sold at these deep discounts feel about this strategy long term?

It sounds like a lot of work for consumers as well as the retailer. As consumers have less time, the idea of having to check on items every week and then trying to figure out when to get the right price before the item is gone adds inconvenience. Then the consumer would have to complete shopping somewhere else. This sounds like a fun novelty but not a concept that works for consumers who have little time to shop.

Fred’s customers will love this new treasure hunt experience, and I am sure this program will build new customer momentum in Fred’s Closeout Bonanza. The key — keeping merchandise fresh and surprising with great finds, especially on the first days. My thoughts have turned to the absolute necessity of item procurement; they must have found some key vendors willing to work with them, and assure them that product will be constantly available. That’s the life line! I hope the rent is low enough to meet the requirements of low margins. That being said, this has the excitement of Harbor Freight Stores clearance tent sales on Saturday mornings.

I think this is a lot like Groupon when it debuted. It’s interesting until it isn’t. Color me doubtful this is around still in February.