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Retailers Relying More on Promotions This Year to Clinch a Sale

If it seems there is a sale every weekend at your local store, you are probably right.

Statistics show that during the first three months of this year, retailers were putting up more signs for special promotions than during the same period last year.

According to a study by DynamicAction, which studied data from more than $5 billion in consumer transactions for its “Retail Index: Spring 2016,” full-price sales were down 4 percent during the first quarter of this year compared to last year and orders using promotions jumped 63 percent.

March was an especially promotional month, with an 86 percent increase in orders using promotions compared to 2015.

While retail profits were up an average 5.2 percent compared to last year, most gains occurred in January with increasing volatility in February and March.

In addition, retailers found it harder to convert first-time buyers into second-time buyers with those conversions down 6 percent from last year.

“The antiquated strategy of retailers relying exclusively on their promotional calendars to run their operations has fostered an ingrained need for discounts by consumers, who are increasingly being trained to wait for promotions or discounts prior to making a purchase,” said John Squire, chief executive and cofounder of DynamicAction, based in Redwood City, Calif.

“The very best retailers are preparing right now to answer customers’ needs and beat shareholders’ expectations during the holiday season of 2016 by focusing on curbing the promotional addiction and utilizing their full data set to better manage inventory and operations,” he added.