WSJ 11-27-2002

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Databases selected: Multiple databases. .. Full Text (2078 words) Cracking the Code: How Not to Pay Retail --- As Retailers Rev Up Discounts, Shoppers Deploy New Tricks; If It's Tuesday, Shop for CDs By Jane Spencer . Wall Street Journal . (Eastern edition). New York, N.Y.: Nov 27, 2002. pg. D.1 Abstract (Summary) With CDs and DVDs, a growing emphasis on sales volume means prices actually rise over time, a pattern that seems counter-intuitive to most shoppers. In an effort to capitalize on the excitement created by a new release, stores launch deep discounts at the outset to drive demand even higher. At J&R Music & Computer World, CDs are cheapest in the five to seven days after their release. Not every chain adheres to such a rigid pattern: Tower Records, among other stores, keeps prices low as long as the CD remains a bestseller. Still, this month and next are a great time for CD shopping. Music labels have stacked the holiday-season decks with a disproportionate number of big-name new releases, including albums from Jennifer Lopez, Snoop Dogg and Paul McCartney, and a second soundtrack to Eminem's movie "8 Mile." Billboard.com publishes a list of releases the week before. In addition, the entire videogame market works on a five-year cycle, tied to the release of new PlayStation2 game consoles ($199). The price on newly released games starts to fall in the third and fourth year of the console lifespan. Since PlayStation2 was released in 2000, it is currently less than half way through the current cycle. But next year, videogame experts expect the price of the average new game will drop to about $39.99 from $49.99. (Microsoft Corp.'s X-box, at $199, and Nintendo GameCube, at $149.95, have been out only a year, but the price points on their games tend to follow those on PlayStation2 games for competitive reasons.) FROM DIGITAL CAMERAS to Osbourne family action figures, the discount wars already are raging on the season's hottest products. While Christmas discounts have been creeping earlier for years, this time around some retailers have a secret weapon driving the deals: new pricing software. Adapted from the computer programs that airlines use to set ticket prices, the systems analyze customer-buying patterns to help stores determine when to launch discounts. A small group of the nation's most sophisticated retailers, including major national chains like Brooks Brothers Inc.; Saks Fifth Avenue, a unit of Saks Inc.; and Circuit City Stores Inc. are using or testing some form of the software this year. So far, the new programs have delivered one clear message to retailers: start markdowns earlier. Brooks Brothers, which has traditionally shied away from early discounting, already has launched promotions on its line of merino wool sweaters. At J.C. Penney, gift items ranging from Holiday Barbie to motor scooters were recently put on clearance. Saks is selling Badgley Mischka beaded pants for $1,515, a thousand dollars off the full price. All of the
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