Rebates: Invigorate 2013 Marketing Efforts With Promos That Move the Needle
By Theresa Wabler, Theresa.Wabler@Parago.com
As retailers and manufacturers settle into the reality of the “new normal” of shoppers who will continue their frugal consumption habits amidst recession or not, it’s crucial to employ promotional tactics that generate significant, lasting value, not just a flash in the pan. As marketers consider their options, one tried and true promotional tactic should be included to yield definite results: rebates.
The value of rebate programs is at an all-time high thanks to consumer shopping behavior. Sensitivity to price continues to endure, and shoppers are willing to hunt for bargains more than ever. Consumers still comb through circulars and price compare on shelf, but now ‘showrooming’ and digital price comparison has made product-level price competition even more contentious.
The good news for marketers is that while price perception is king, consumers are indifferent to how that price point is achieved — whether through rebate, coupon, club or sale. However, since consumers understand that rebates offer deeper discounts than other sales, there is a strong interest in the promotions and shoppers are actively looking for rebates before and during the shopping experience. In fact, a 2012 survey of more than 1,000 consumers showed that 80% of shoppers actively look for rebates.
Smart marketers are able to leverage rebates to drive lowest price perception while achieving additional marketing benefits that coupons and instant discounts can’t touch. Rebates provide high-value customer information during the redemption process, and with the right rebate reward, drive customers back to buy more, creating ongoing engagement. Rebates deliver the opportunity for ongoing interaction with consumers.
The rebate process naturally provides the sponsor with purchase data, consumer demographics and 67% of consumers opt-in for special deals and promotions — creating a significant, intelligent database. Additionally, modern rebate programs have been shown to facilitate a valuable brand interaction, which translates into a positive customer experience. Over the past two years, price has steadily risen as the primary diver of consumers’ purchasing decisions, from 60 percent in 2010 to 66% in 2012.
Thanks to new technology, rebates are simple to redeem today. In many instances, they involve an easy click of a mouse and a few fields of information, with rewards being delivered in as little as two weeks. Consumers also now have a choice of payout method, including paper check, branded prepaid card, gift cards and even PayPal. Rebate programs are now designed based on research and consumer best practices, with proactive communication like status alerts, easy tracking and customer service.
For decades, rebates have proven to be effective consumer promotions that drive sell-through of specific products while providing savings to price-conscious. But their enduring value has continued to increase among shifting shopper trends. Now, marketers can feel confident incorporating rebates into their overall strategies since they have evolved from a simple “sales lift” tool to a tactic that will generate long-term consumer loyalty and brand affiliation.
Theresa Wabler is the director of marketing at Parago, a leading global source for incentive and engagement programs that motivate consumers, sales channels and employees. Prior to joining Parago, Theresa had a number of strategic marketing roles with incentive and payments companies, including Citi Prepaid. She can be contacted at Theresa.Wabler@Parago.com.
Cabela’s customers continue to buy guns
First quarter same store sales are expected to increase in the high teens at Cabela’s and drive earnings substantially higher than analysts’ estimates, the retailer said late Tuesday in advance of an investor conference today.
Cabela’s reported a firearms and ammunition driven 12% same store sales increase for its fourth quarter ended December 29, 2012. When those results were released a month ago the company said the favorable trends seen in the fourth quarter had accelerated into the first quarter.
"We are pleased to report that this trend has continued through today," Cabela’s CEO Tommy Millner said Tuesday. "These improvements are in both our retail and direct channels. This growth is coming from most of our merchandise categories. As a result, we expect first quarter comparable store sales to increase at least at a high-teens rate."
As a result of the sales momentum, Millner said the company expects to report first quarter earnings that are 10 cents to 15 cents above current analysts’ consensus estimates.
While Millner indicated sales strength was evident in most categories, firearms and ammunition likely made a major contribution judging from trends evident in the fourth quarter. Excluding those categories, Cabela’s fourth quarter comp increase would have been 5% rather than 12%.
Sales and earnings up at Express
COLUMBUS, Ohio — Express, a specialty retail apparel chain operating more than 620 stores, reported that fourth quarter net sales increased 8% to $728.7 million from $673.2 million in the fourth quarter of 2011.Comparable sales increased 1.5%, following a 5% increase in the fourth quarter of 2011.
Net income was $63.9 million, or 75 cents per diluted share. This compares to net income of $60.4 million, or 68 cents per diluted share in the fourth quarter of 2011.
Net sales for the full year increased 4%.Comparable sales for the year were flat, following a 6% increase in 2011.
Net income was $139.3 million, or $1.60 per diluted share. This compares to net income of $140.7 million, or $1.58 per diluted share, in 2011.
During the fourth quarter of 2012, the company opened 8 new stores, including 3 in Canada, and closed 1 store in the United States. For the full year 2012, the company opened 28 stores, including 5 in Canada, and closed 12 stores in the United States to end the year with 625 locations and 5.4 million gross square feet in operation. The company’s international franchisees opened 4 stores in the fourth quarter and 8 stores during the year, ending 2012 with 15 locations across the Middle East and Latin America.
Michael Weiss, Express Inc.’s chairman and CEO commented, "We ended the year positively, with the initiatives we implemented in our women’s business driving improved results. These initiatives included: re-balancing our sweater assortment, introducing entry price point fashion items in key categories, especially cut-and- sew knitwear, and communicating clearer pricing and promotional strategies. Our men’s business continued its positive momentum and, along with disciplined expense and inventory management and the aforementioned women’s initiatives, drove increased sales, positive comparable sales, and net income per diluted share above the increased guidance provided in the fourth quarter. We attribute our improved performance over the third quarter to the strength of our products, specifically sweaters and cut-and-sew knitwear, which we had previously identified as categories for improvement. In addition, we generated our third consecutive year of double digit e-commerce sales growth and achieved our store expansion goals. We were also pleased with our international expansion that included the opening of 4 additional franchise stores in the Middle East and our first four franchise locations in Latin America. Our balance sheet remained strong with cash and cash equivalents totaling $256.3 million at year end, even after investing $65.1 million to repurchase 4.0 million shares of common stock during the year. As we begin 2013, we expect to advance each of our existing four pillars of growth. In addition, we are also excited to pursue a new growth opportunity in 2013 through the development of a new Express outlet business."
"While our guidance anticipates a softer start to the year, reflecting the impact of reduced traffic levels and consumer spending in the month of February, our spring merchandise has been received favorably by our customers, resulting in an improvement in conversion, which we do consider to be a leading indicator, early in the first quarter," commented Weiss.
The company expects first quarter of 2013 comparable sales, including e-commerce, to range from flat to down low single digits compared to an increase of 4% in the first quarter of 2012. Net income is expected in the range of $29.5 million to $32.5 million, or 34 cents to 38 cents per diluted share on 85.5 million weighted average shares outstanding.
The Company expects full year 2013 comparable sales, including e-commerce, to increase low single digits compared to a flat performance in 2012. Net income is expected in the range of $120 million to $132 million, or $1.40 to $1.54 per diluted share.