Conventional wisdom says that prices generally not perish after inflation drives them up. But a handful of retailers have bucked the trend, and Michaels is the latest retailer to announce major price cuts.
In mid-April, the arts and crafts chain announced that it had reduced costs on more than 5,000 items. Discounts ranged from 15% on commonly purchased items like paints, markers and pens to 35% on canvases and 40% on T-shirts. Shirts.
John Gehre, chief merchandising officer at Michaels, said Retail Brew that customers will experience “constant rollbacks over the next six months to a year.” He also stressed that the cuts were not part of a limited advertising cycle, but rather a permanent strategic shift.
“This is more of a permanent approach,” he said. “When I think of a promotional cycle, I think of one event, one week, two weeks, three weeks, something like that. This is a longer-term strategy that we want to implement.”
Joining the deflators
While inflation is still Increase over 3% Across the economy, the chain isn’t alone in cutting costs on some items.
- In its last conference call in February said Walmart CEO Doug McMillon said prices for general merchandise are lower than a year ago and that prices for some staples like eggs and apples are also lower.
- In addition, at the end of 2023, Ikea announced its “New lower priceThe initiative promises to reduce prices on 600 items by up to 20%.
But deep discounting at a few retailers doesn’t mean continued deflation. As Coke CEO James Quincey said CNBC Screaming in the street Earlier this year: “If you look at inflation over time, we very rarely get into periods of sustained deflation. This is simply not a consumer effect.”
For Michaels, Gehre said, “the real trick” to making price cuts work in the long term is whether they significantly boost demand.
“We believe it is the right thing to do and we believe it is another tool we can use to drive traffic to our stores and build loyalty,” he said.
This report was originally published from Retail Brew.