RETAILERS' HOLIDAY PRICE WAR HITS NEWSPAPERS

By: Joe Nicholson 'Advertise Early and Often' Seems a Likely Scenario





With holiday sales lagging, retailers are slashing prices and
filling newspapers with ads announcing price cuts. Moreover, some
retailers are expected to race back to newspapers to buy last-

minute run-of-press (ROP) ads announcing additional price cuts as
they occur.



Newspapers are having it both ways: They benefit from retailers
who fixed their ad schedules before they realized the extent of
pre-holiday sales sluggishness, and now the papers are picking up
last-minute ads announcing price cuts. "It's going to be a price
war," predicted an East Coast department store executive who has
been in the business for more than two decades. "Just follow this
week's ads and you'll see what I mean."



Department stores and other retailers seeking to move inventory
are dropping prices more dramatically than during any holiday
season in recent memory, the East Coast executive said. Some
retailers are promoting their price cuts by buying additional
newspaper ads while others are revising previously scheduled ads
to promote the new cuts, he said.



Another department store executive said newspaper ad executives
must now prove whether or not they are retailers' friends. "The
best way they [newspapers] can be helpful is to understand the
current dilemma of the big retailers," said the department store
executive. "Help them with position, help them with price, and
help them with reaction - ability to make last-minute
changes to add ads if necessary." He added that some newspapers
"are terrible and some are partners ... Most are partners."



A respected retail forecaster agreed that the holidays will be
marked by price battles. "There will be price wars undoubtedly
simply because America is overstored and consumers will be
careful about spending money," said Kurt Barnard, president of
"Barnard's Retail Trend Report" in Upper Montclair, N.J. He has
forecast retail industry trends and consumer spending patterns
for 45 years.



"The holiday sales season is going to be decent for most
retailers, but not spectacular," added Barnard. "It is going to
be a cautious season for retailers because it is going to be a
cautious season for customers. ... There will be gains made by
most retailers, but the gains will be smaller than the gains
achieved a year ago."



Newspapers "are likely to do modestly well," said Barnard. "We
see this holiday season as being more promotional than a year
ago." He said some retailers may buy additional newspapers ads to
promote sales, but that "a lot of retailers are going to go into
television."



Of course, the outlook varies from market to market. On the West
Coast, Bob Brown, the retail advertising manager of The
Sacramento (Calif.) Bee, said his market was
undergoing "tremendous growth" and predicted merry holidays for
both retailers and newspapers.



"Retail sales will be good, [but] not great," said Brown, who has
spent more than two decades in advertising at the Bee and
other newspapers. As for newspaper ad sales, Brown reported that
managers of chain stores in his market are worried about
inventory. "They don't have enough inventory in same cases," he
said. "I just know from talking to my local store managers that
it is a concern."



In the heartland, a marketing executive at a Milwaukee-based
department store chain said his stores' holiday sales outlook is
very good. "We're quite upbeat," said Richard Schwab, vice
president of marketing and administrative services at Carson
Pirie Scott department stores, which operates 95 department
stores in Midwestern and northern border states. He added that
the home and furniture categories were particularly strong, while
feminine apparel and feminine accessories also were showing
strength.


Schwab, who has had success with the double punch of direct mail
and "very dramatic, dominating main-section-position ROP," said
he was not planning to make any changes in his holiday ad plans.
"We're all set," he added. "Now it's all up to execution."



Schwab conceded, however, that his department stores' bullish
prospects were not necessarily shared by other department stores.
"I'm sure it's true there have been some problems throughout the
year in feminine apparel, and then if your inventory positions
are bad, you are faced with cutting margins," Schwab said. "You
can sell a lot of it, but you are selling a lot of it at a lower
price, and you are not going to make your margins."







Joe Nicholson (jnicholson@editorandpublisher.com) is an associate editor covering marketing and advertising for E&P.







Copyright 2000, Editor & Publisher.