Retailers, accustomed to bludgeoning each other with storewide sales, giveaways, extra discounts and rebates, may find those tactics have gone the way of Christmases past. Even before Halloween, their new cyber-competitors began luring customers with that irresistible four-letter word: Free.
"It's an incredible battle," said Ellis Verdi, president of DeVito/Verdi, New York, agency for Linens 'n Things. "These companies have to grow by leaps and bounds at any cost."
For example, Toys "R" Us is offering a free original Tickle Me Elmo, the hot toy of the 1996 holiday season, with orders of more than $100. KBkids.com is offering free shipping; drugstore site more.com is offering locked-in prices and free shipping for life.
COUPONS AND DISCOUNTS
MotherNature.com is giving away the first $20 of a new customer's first purchase; Amazon.com is enticing customers to move beyond its book and music sections by providing customers with money-off coupons for purchases on, say, its toy site. Genesis for the big battle is in the success of last year's holiday season online, with eToys posing a wake-up call for the important toy category.
This year, online sales estimates for the holiday season are pegged at some $10 billion, moving the number from previous years' mere accounting errors to something that might approach a registerable percentage of retail sales.
A Deloitte & Touche study found consumers who have shopped online in the past expect to spend almost one-fifth of their holiday budget online, some $219 of their overall holiday expenditures of $1,067.
LinkShare Corp. said its studies have found that browsers are becoming online consumers, and those already shopping are buying more than ever. Third-quarter online purchases were up 54 times over the same period last year, according to LinkShare.
Traditional retailers, from discounter Wal-Mart Stores to specialty shop Banana Republic, have beefed up their cyber-sales capabilities while still making separate stands for their brick-and-mortar stores. Others, such as KBkids, are pushing in their advertising that they have click-and-brick synergies -- customers can return items to stores.
"It's going to be a bleak Christmas for the inert traditional retailers like department stores," said Burt Flickinger, managing director, Reach Marketing.
Traditional retailers are hardly deferring to the virtual marketers. Mark Cohen, president of Softlines and chief marketing officer for Sears, Roebuck & Co., said he believes the millennium will only enhance his stores' outlook.
"This may be a more attractive selling season than we've seen in the last few years because of the millennium," he said.
Sears' holiday effort will center on more than two dozen TV spots, half promoting specific store events and the rest focused on merchandise. In one spot backing a purchase-with-purchase offer, a woman enters an elevator with a square cosmetic train case. When she steps out, she catches the attention of a man riding with her. The case, with 64 cosmetic items inside, costs $24.99 with a $25 or more purchase.
Sears also is putting its fourth-quarter marketing dollars, about the same as last year, behind the push, Mr. Cohen said. According to Competitive Media Reporting Sears spent $242 million during the quarter, behind free-standing inserts, radio and direct mail. In addition, Sears will sponsor three separate TV specials on CBS starring Ricky Martin, Celine Dion and Shania Twain.
Kmart Corp. this week makes a heavy investment in holiday programming as part of its fourth-quarter selling efforts.
Kmart backs the production of "CinderElmo" on Fox Dec. 6, and will be principal sponsor of TV specials featuring Rosie O'Donnell, Martha Stewart and Barbara Walters.
New TV spots, from Campbell Mithun Esty, Minneapolis, will continue to feature Naomi and Wynonna Judd, Penny Marshall and Ms. O'Donnell.
Some of last year's top Web retailers, such as Lands' End, are hoping to break through the holiday clutter with a service message. Its ads feature the Lands' End Live personal shoppers, who will get on the phone with Web customers as both navigate the site.
Advertising is from Biederman Kelly Krimstein & Partners, New York.
"There is now emerging awareness that shopping online can be enhanced if there is customer service [that] people have come to expect," said Lee Eisenberg, exec VP-creative.
While Lands' End is working to maintain its direct-mail contact with customers through catalogs and a number of new catalog features -- such as a mystery celebrity contest and a 12-page gift guide -- Lands' End also doesn't mind the shift from catalog to online.
"We're channel agnostic," Mr. Eisenberg said.
Other retailers are trying to reposition themselves to better compete this critical holiday season. Best Buy Co., which won't get into the e-commerce game until next year, is fighting against national discounters and cyber-sellers by promoting its higher ticket items, such as HDTV.
"The market is saturated," said Bill Nordin, creative director-image advertising at Best Buy.
In a last hurrah for Best Buy's pricetag character -- which will be dropped early next year in favor of a branding strategy -- the animated holiday spots turn the tag into a stardust emitting a magical force that tranforms everyday items.A standard telephone, for example, morphs into a cordless one. Spending is estimated at about $75 million in the fourth quarter.
The Good Guys, a West Coast electronics chain struggling to compete with national discounters and cyber-sellers, is repositioning itself as a high-end specialty store.
A new estimated $10 million TV campaign from Citron Haligman Bedecarre Euro RSCG, San Francisco, breaking later this month spoofs "electronic envy."
TV spots are tagged "It doesn't get any gooder," and for the media and ad agencies participating in this happy holiday season -- that may well be just the case.