It makes all of the sense in the world. The stores offering the best discounts are getting most of the traffic this holiday season. But, that may be a mixed blessing.
According to data collected by American Research Group and reported by Reuters, companies including Costco (COST) and Wal-Markt (WMT) have effectively brought in significant traffic with big price cuts. Retailers like Macy’s (M) and Circuit City (CC) which have been more stingy have seen only modest traffic.
But, discounts are double-edged. They may get a lot of buyers, but resulting margins may be very weak. Cutting prices too much is a tactice which may well back-fire.
Douglas A. McIntyre
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