Increasingly, companies are using so-called optimization software to judge when and how much to discount -- and reduce risks to profit. The programs use company data to predict the impact of proposed price cuts on sales, and they alert suppliers to adjust inventory and delivery for specific promotions
"American retailers have the luxury of making use of technology," said Julian Chu, who heads the retail practice of International Business Machines Corp's Institute for Business Value. "Europe is changing, but it'll take time. The need for this type of technology hasn't emerged as quickly in some countries where the rules don't allow for it."
In Japan, some retailers such as Sakuraya Co are offering Microsoft Corp.s Xbox video-game console at 20 percent off to undercut the price of Sony's PlayStation2, which has been outselling Xbox.
For Hong Kong's retailers, four years of declining prices, near-record unemployment and falling sales have made discounting more necessity than choice. The local branch of Japan's Seibu Department Stores Ltd held a pre-Christmas "private sale" offering discounts of up to 60 percent for holders of credit cards issued by HSBC Holdings Plc.
"Retailers have to work a lot harder," said Yu Pang-chun, chairman of the Hong Kong Retail Management Association. "There is a lot more promotion in terms of discounting and in-store promotions, gifts with purchases and VIP days."
The discounts haven't been enough. Hong Kong's retail sales have fallen for 15 of the last 16 months from year-earlier levels.
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