Photo: RetailWire
Will Deal Days help Target clear its inventory?
Target is bringing back Deal Days, its answer to Amazon.com’s Prime Day, with big discounts and gift card rewards on product categories across its stores and target.com.
“We know guests look forward to Target Deal Days every year. With this year’s event being our biggest ever, guests can shop more incredible deals and items, with three full days to save on must-have products that will bring them joy all summer and beyond,” Christina Hennington, executive vice president and chief growth officer, Target, said in a statement. “From offering the most sought-after brands in retail and unparalleled savings to multiple, convenient fulfillment options within our nearly 2,000 stores, guests can shop Target with ease and confidence, knowing they are getting an incredible value.”
The promotion, running July 11-13, may be just what Target’s general ledger needs to kick off the third quarter. The retailer lowered its forecast for the second quarter and said it would mark down merchandise and cancel orders after it saw operating income fall to 5.3 percent in the first three months of the year, down from 9.8 percent in 2021. The chain ended the first quarter with inventory about 43 percent higher than the year before.
Target’s event will go head-to-head with Prime Day, which will run on July 12 and 13. Amazon has already begun offering pre-Prime Day deals to build sales momentum heading into the promotion. The stakes are higher this year for Amazon as well after the retail and technology giant posted a first-quarter loss, its first in seven years.
Other retailers, including Best Buy and Walmart, are expected to launch competing sales.
Walmart held its first Walmart+ members-only sale last month (June 2 – 5). The event, according to Numerator, yielded larger market baskets for the retailer with members spending an average of $69.75 per order, higher than the average walmart.com order ($64.99) and Prime Day in 2021 ($54.17).
Groceries played a much bigger role during Walmart+ Weekend with 59 percent of all orders containing groceries. Seven percent included health and beauty products and six percent household products.
Target is playing up groceries as part of Deal Days offering a $10 gift card on $50 purchases of food and beverages. It is also discounting beauty products 25 percent.
- Target Announces Biggest Target Deal Days with Savings on Hundreds of Thousands of Items Across All Categories – Target
- Target isn’t wasting any time in cutting the glut from its inventory – RetailWire
- Does Amazon need a great Prime Day now more than ever? – RetailWire
- Walmart+ Weekend Early Results Show Low Awareness, High Inflation Impact, Numerator Reports – Numerator/Globe Newswire
Discussion Questions
DISCUSSION QUESTIONS: How do you expect Target’s Deal Days, Amazon Prime Day and other July sales events by large retailers to stack up against their 2021 results? Will Target’s event enable it to achieve inventory equilibrium as it moves into the second half of the year?
Poll
Loading …BrainTrust
Michael La Kier
Vice President, Brand Development - IGA, Inc.
Patricia Vekich Waldron
Contributing Editor, RetailWire; Founder and CEO, Vision First
Christmas in July – join the club. With less disposable income available because of inflation issues, I think it will help some but not with most retailers in the same boat. I don’t know what kind of numbers we will see this year. I can’t wait.
Target has too much inventory, by its own admission, and hopefully it has already begun tackling these problems long before Deal Days. (Another three weeks is too long to wait.) Target can leverage the Deal Days marketing plan to help clear excess goods, but the event needs to draw store and site traffic by promoting wanted categories too.
The key is to direct some of this traffic to clearance merchandise but not to sit on those problems too long. By mid-July, Target’s Back to School setups need to be in full swing.
I expect Target’s Deal Days to do well. I guess, ditto for Prime Day (but for some intangible reason, I don’t think it will be a barn burner).
I know I’ve said this before. July and August promotions are a retail tradition dating back a long, long time. Promotional product drives people to the site/store, and then one hopes to sell some product at full price, or at least at a profit. The timing is right. The consumer remains very, very price sensitive.
Target has some tough prior year numbers to beat. Doing that in a more suppressed demand environment where households are constrained is challenging. The Deal Days will help to drive sales activity, especially in categories that have slowed. However the real challenge for Target is not the top line, it’s the bottom line and I am not sure a discounting event – which essential to clear down inventory – will help to resolve the issues.
The success of Target’s Deal Days will depend less on pricing and more on in-store service. If shoppers have to wait 30 minutes to check out, Amazon becomes a much better option, even if the price is higher.
Every consumer is looking for ways to save money these days so Target’s Deal Days and Amazon’s Prime Day will likely be big hits this year.
We all know you can get anything you want from Amazon, but Target’s merchandise has that extra zazazoo. And instant gratification because Deal Days happen in-store, too.
With ever-increasing gas prices and daily news of inflation, America is ready for deals! Prime Day, Deal Days, and others are hitting at the right time. The events are likely to record sales above 2021 numbers.
There are several forces impacting retail, mostly to the negative. The concurrent sales events of Prime Day and Deal Days may juice consumer spending a bit, but it is hard to fight the general doldrums of mid-summer consumer spending.
Deal days and July sales will help clear out inventory but won’t fix the fundamental challenge of why retailers continue to overbuy and miss the mark on planning/forecasting.
Getting to the heart of the issue and rethinking how we go to market is critical. Now more than ever.
With supply chain disruption plus archaic ways of working and old school methodologies of planning product assortments still very real today, reactive vs proactive strategies should be top of mind.
Today we triage – getting to the heart of why we need to consistently markdown product, why there is so much excess and why we overbuy to begin with is imperative.
Spot on with this, Liza!
The deal days and aggressive promotional strategies may serve as a way to drive revenues and reduce excess inventory.
However, as you have stated, the digital and customer-first operating model requires a complete reimagination of merchandising, assortment planning, allocation, replenishment, and supply chain capabilities, to a modern-day, agile operating model.
There is a fundamental clash between the old-school ways of over-compensating and over-buying, with more insights and pragmatic practices to merchandise based on fluctuating consumer demand.
I’m sure Target’s Deal Days will eliminate some of the excess inventory but not all of it. With inventory 43 percent higher than last year, that’s a lot of product to move in a short period of time. That said, the $10 gift card valid for $50 worth of groceries and the 25 percent discount on beauty products are great moves, which will drive higher baskets.
Compared to 2021, these summer sales offer deeper discounts and face fiercer rivalry from services like entertainment and travel.
Target’s Deal Days will improve its inventory equilibrium costs in the second half of the year. Jumpstarting sales a full day before Prime Day is shrewd. Generous discounts, popular shop-in-shop partners and spectacular private brands will make Target’s sale successful.
Even if the merchandise is out of season, consumers will likely snap it up given the pressure to make their dollars go further.
My belief is that fireworks will occur. It depends on product offerings, but this is going to be over the top because everyone is hungry.
There is no doubt that Target has to move inventory with 43 percent higher inventory than a year ago. Deal Days is one vehicle to do so. However the challenge for all of the noted major retailers (brick and mortar as well as online) is to do so profitably. Anyone can give product away. It takes brains to sell it.
Target offering “incredible” value. That is the claim. Every day is a sale day. Every day at Target I save 5 percent by using my RedCard. Running events at the same time as your competition feeds the frenzy to save, but I doubt this will solve anything. $5+ gas prices and higher food prices suppress demand. I do like bounce back gift card incentives with a spending threshold met – this should yield incremental trips for those that employ it. This is all about transactional relationships with zero effort to build continuity, just chasing sales.
With the economic uncertainty, consumers might hold back from splurging on sales. Gas prices, inflation, interest rate hikes, layoffs, war in Ukraine — and that Target and Amazon sales are simultaneous — are likely to cause a less-than performance compared to last year.
The timing for both Target’s Deal Days and Amazon Prime Day couldn’t be more ideal for a society impacted by rising inflation rates, surging gas prices, and the overall anxieties about our economy. Retailers, in general, have over-compensated their inventories to meet consumer demands and mitigate the supply chain disruptions we have been experiencing.
An aggressive Deal Days promotional strategy will help Target sell down some of its excess inventory. However in addition to these compelling deals, consumers will look for premium, seasonal and trendy assortments. There is only a limited window for Target and others to stay ahead of the curve before back-to-school season kicks in. Time is of the essence for Target and Amazon.
Markdowns, clearance sales, and vendor/factory cancellations all deal with the back end of the problem — inventory owned today. What’s missing is the conversation about why the problem is as bad as it is. A bad miscalculation on demand coupled with a bad decision on buying too much “just in case” inventory due to chaos in the supply chain. And now retailers are cracking the whip at the supply chain all over again. Now we’ll have renewed chaos while factories are processing fall and holiday product. No shot at anything resembling normal until spring 2023 — at best. Oy.
Summer sales will appeal to cash-strapped consumers. It’s a good time to promote new merchandise and get stale stock out of stores before the holiday season.
Is Target’s Deal Days a promotion to compete with Amazon Prime Day? Or is Target’s Deal Days a way to move excess inventory? The answer: Why not both?
Target badly needs to clear its DCs and free up some inventory cash, so an early and deep Deal Days is a natural step. While its is competing head-to-head against Prime Day promotions, somehow I think a halo effect may come into play, with benefits for both.
The announced promotion on grocery items seems like a separate tactic to me. I doubt Target really needs to sell down its food and beverage inventory much. This is about traffic and baskets. It should generate some nice stats, but it won’t help so much with excess inventory in other categories.
Target has an efficient network of in-store and online operations. It certainly has a strong store footprint, and with the omnichannel presence, Target has an edge over retail giants like Amazon. The two most important factors which contribute to customers’ buying decisions are price and convenience. Huge markdowns in prices with sound marketing will induce customers to stock up and simultaneously, will also reduce Target’s burden of excess inventory to some extent.