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Retailers Combat Holiday Discounting with Exclusive Merchandise

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By Laura Heller, dealnews contributor

Bargain seekers who love to price check the items they purchase, beware: some of the season's hottest gifts this year will be exclusive to certain retailers, which will complicate price comparisons. And that's exactly why retailers are offering the exclusives in the first place.

Designer partnerships, limited editions, and exclusive items are the hottest trends in retail right now. While this benefits shoppers in some respects (for example, there's a wider variety of gifts to choose from, and in some cases it provides an opportunity to get a budget version of a desirable high-end brand), it also puts stress on stock and makes comparison shopping challenging.

Exclusives Draw Shoppers In-Store

The marketing of exclusives isn't entirely new. In fact, it's all part of retailers' efforts to halt showrooming. Late last year, retailers took action against their online competition and got serious about differentiating merchandise. Target's Chairman and CEO Gregg Steinhafel fired off a letter to suppliers putting them on notice, demanding that they provide more exclusive products or lower their prices so that Target could price match its competitors.

The suppliers complied, and Target has rolled out exclusive designer partnerships at a rapid clip throughout 2012, with this holiday season set to feature a veritable feast of exclusive merchandise. Target's biggest effort by far is a holiday partnership with Neiman Marcus and the Council of Fashion Designers is sure to drive traffic to both stores and websites. The collection features 24 well known designers that are all members of the Council of Fashion Designers of America (CFDA). The line, which boasts participation from Alice + Olivia, Diane Von Furstenberg, Oscar de la Renta, and Derek Lam, will be available starting December 1 at all Target and Neiman Marcus stores, as well as online.

These designers are edgy, young, and very of-the-moment names, and given the furor with which shoppers snapped up the Missoni for Target collection last year, this year's Target collection is likely to create a similar buzz and demand.

Macy's, too, has curated a collection of exclusive gift items from designers. Some are part of the department store's regular line-up of featured partners like Martha Stewart, Sean John, and Tommy Hilfiger, but new faces include Betsey Johnson, Calvin Klein, Greg Norman, Michael Aram, and Michael Kors.

Exclusives Make Their Mark in Crowded Toy Markets

Toys "R" Us began promoting its holiday exclusives in early September upon debuting its own tablet, the Tabeo. The Tabeo is now available in-store, though it enters a rather crowded product category competing directly with other Android-based kid-friendly tablets like the Nabi, Meep, Archos, and LeapPad Learning Tablet and small "adult" tablets in the price range like the new Kindle Fire HD. However, Toys "R" Us's foray into the tablet market remains an indication of how serious retailers are about developing and selling hot products that can't be found anywhere else.

In addition to its Fabulous 15 Toys and the exclusive Tabeo, the Toys "R" Us is promoting its own brands, such as Imaginarium, and products made by other toy manufacturers under the Toys "R" Us brand in its 44-page catalog, which features nearly 350 exclusive toys. In fact, it appears as if Toys "R" Us's entire holiday campaign is built around exclusive merchandise, which simultaneously manages to create buzz for in-store spending without disrupting its shoppers' interests in non-exclusive items, like bicycles, Barbie, LEGO, and more.

Amazon, too, is padding its online shelves with exclusive merchandise. Its Holiday Toy List of more than 100 products boasts 23 gift items exclusive to the retailer, including My First Lab Stargazer Telescope and specialty toys such as the Begin Again Eco-Friendly on The Go Travel Kit. According to Amazon, the retailer responsible for the showrooming phenomena is hell bent on not being showroomed itself for its product reviews.

Big-Ticket, Non-Exclusive Name Brand Merchandise Draws Crowds, Too

While exclusive merchandise generates hype, so do regularly priced big-ticket, name brand items. For example, we'll continue to see Apple products sell out across the board, and gaming consoles and smartphones will be coveted from a number of stores. But, while Apple items sometimes see slight discounts, the hip manufacturer is well-known for being extremely restrictive about discounting — and getting away with it.

In many ways, Apple's model is what these other retailers are trying to emulate. By offering well designed, in demand merchandise that can't be discounted by a competitor (or in Apple's case, isn't severely discounted by a competitor), retailers are taking a page from Apple's playbook this holiday season.

Front page photo credit: Tecca
Photo credits top to bottom: More with Less Today and TechnoBuffalo



Laura Heller is a freelance writer based in Chicago who specializes in mass market retail trends and consumer electronics industries. You can follow her on Twitter @lfheller.

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Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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