Can traditional retailers compete with Groupon?

From a recent RetailWire blog: The question is whether traditional retailers (whether brick-and-mortar or multichannel) can compete against the sort of deep discounts offered by “deal of the day” sites. Here’s my opinion:

Traditional retailers would be smart to develop their own “daily deal” concepts, and in fact some of them are starting to do so. It’s one way to reach your most loyal customers with targeted offers that might be more compelling than your usual discounts — and can also be used to move inventory problems or to partner with key suppliers to drive sales.

But there is still plenty of room for “traditional” discounting, which tends to be offered on broader assortments of items and categories. Best Buy, in fact, runs plenty of sale items every week at discounts deeper than 10%, with the extra savings thrown in on occasion. The overall margins in electronics probably don’t allow for much deeper offers than 10%, but Best Buy ought to have enough margin built into its private brands (Dynex, Insignia) to get more aggressive.



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