The price-raising bonanza of the pandemic-era economy is winding down, and some major retailers are sinking their profits into advertising to recover sales volume.

“Companies are running out of pricing power,” Samuel Rines, economist and managing director of Corbu, told Retail Brew. “Across the board, management teams have said we aren’t going back to the algorithm, which is 2%, maybe 3% price increases.”

While admittedly raising margins for retailers, price increases also pushed many consumers to aggressively trade down to cheaper options, Rines explained. Now, companies are fighting to get those customers back, and advertising is one way to do it.

Rines called the effort “the battle for volume.”

Fighting back: Among those doing battle is Lowe’s. Bill Boltz, EVP of merchandising at the home improvement retailer, told investors last week that savings from cost-cutting efforts are being reinvested into “marketing and merchandising strategies to drive traffic and sales.”

He also noted that Lowe’s is experimenting with a new approach to advertising, with the launch of a loyalty program and an “enhanced marketing strategy” this spring.

Keep reading here.—AV

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Target’s holiday shopping season revenue increased 1.7% year over year to $31.9 billion, exceeding Wall Street’s expectations. But the impact of rising prices on consumers showed in the company’s sales figures.

• Total comparable sales fell 4.4% in Q4; comparable store and comparable digital sales dropped 5.4% and 0.7%, respectively.
• For 2024, Target predicts its full year sales will be flat or increase up to 2%.

“Our team’s efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations,” CEO Brian Cornell said in a statement.

Investors appear confident in Target’s vision; the company saw a more than 10% bump in its share price Tuesday afternoon. That’s because the company’s profits are showing signs of recovery.

Keep reading here.—KM

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Matthew Smolin is co-founder and CEO of Hang, which offers an omnichannel loyalty program solution, working with brands like Ulta, Asics, and Budweiser.

How would you describe your job to someone who doesn’t work in retail? When you’re shopping and making a purchase, the brand may have asked if you want to join their loyalty program. They’ll usually offer you some kind of discount or reward if you do this, in an attempt to make it worth your while. The thing is, most of these programs don’t work. We’re rethinking brand loyalty from the bottom up and adding in new levels of personalization and gamification. We think loyalty should be fun and engaging—and most of the time, it is not. This isn’t only a good thing for consumers, but also for the major retailers we work with who are able to better understand their customers and see them return more often!

One thing we can’t guess about your job from your LinkedIn profile? Because loyalty is such a large part of the restaurant industry, and many of our most successful customers are restaurants, we try a lot of new restaurants and do a lot of our meetings with restaurant customers in person in New York City. Since the beginning of time, the best connections have been made over a meal.

What’s your favorite project you’ve worked on? I think of all of the customers we work with at Hang like children, so they are all my favorite. But if I had to pick one that is super exciting, it’s probably Ulta Beauty.

Keep reading here.—EC

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