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Retailers Banking On “Treasure Hunt”

07/11/2011

Across the spectrum of retail – merchants are finding that in a time when consumers are watching dollars closely and the Internet makes discount hunting easy, unexpected treasures are an increasingly important strategy for stores.

Costco, for example, has been using the term “treasure hunt” for years and reserves up to 20 percent of its store inventory to be limited-quantity items that are in the store for less than a week. Products may be seasonal or surprisingly trendy – such as bargain-priced Hunter rain boots, sold almost exclusively in the U.S. by Nordstrom. Costco believes the treasure hunt concept is working. Sales in stores open at least one year were up 10 percent last quarter from last year. Strong growth came from nonessentials likely jewelry and home and garden.

Back in the day, Lands’ End used this concept to drive revenue, test new product categories and to start orders. Called “Find of the Month” the concept was to offer customers an undeniable value, available in one months’ catalog only. Prevailing thinking was that once the customer got on the phone with a service rep they’d be inclined to buy additional items – and it worked. Extremely well.

The dark side of “treasure hunt” or Find of the Month is that retailers become dependent on the revenue. It’s a drug just like sales and discounts. Once started it becomes part of the plan. Once it’s part of the plan merchants are on the spot to deliver more revenue (and margin dollars) from the concept as well.

Perhaps even more challenging is consumers of this stripe are not particularly loyal to any retail brand. The same consumers that go to Costco to buy olive oil and leave with a Marc Jacob leather coat will readily jump ship to a competitor for the newest twist on Find of the Month. For now, retailers are pointing to any successes as important to their strategy.

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