“The wise man doesn’t give the right answers; he poses the right questions.” – Claude Levi-Strauss.
This is certainly true in the retail world as the culmination of asking all the right questions prior to the holidays leads to hope that it positions retailers for a successful selling season. However, inflationary and economic pressures have set the stage for shifting holiday priorities. Here are a few that are most top of mind for retailers.
Will consumers shop earlier or later this year – the answer is both.
In their 2022 Holiday survey, Deloitte detailed that inflation and stockout concerns prompted shoppers to jump on the holiday shopping season – with 23% of budgets likely being spent by the end of October. Heck, even Amazon has held 2 Prime Days, the first time it has offered a site-wide sale twice in a year. Why? Consumers have spent the past few years living through the holiday pandemic seasons and witnessed supply chain & staffing challenges, longer lines, and unpredictable prices. In fact, as early as July, Google searches for “Black Friday deals” grew by over 200% in the U.S. compared to just a year ago. While this distribution of revenue over a longer selling season helps retailers, there is another consumer segment that plans to shop later in the season, some up to the very last minute. Vericast’s survey data indicates slightly more than half of shoppers (53%) will begin their holiday shopping in November or December. The primarily dividing line appears to those who have added savings and disposable income, more likely to get an earlier start to their shopping prior to October, while those experiencing financial challenges appear more likely to be last-minute shoppers, waiting until December to start making purchases.
Will customers return to stores?
Foot traffic in stores has not yet rebound to pre-pandemic levels. In September, it was down 8.8 percent in department stores, and 8 percent in specialty apparel, from last year, according to Placer.ai, which tracks foot traffic through mobile phone data. Compare that with 2019, and department-store foot traffic was down 24 percent, and specialty apparel down 14.5 percent.
If you are thinking that foot traffic declines are the result of increasing online sales, that may not be entirely correct. According to Adobe Analytics, online sales are expected to increase just 2.5 percent, to $209.7 billion, this year. Compare that to a 33 percent growth in 2020 and an 8.6 percent growth last year.
That said, consumers are still seeking an experience when they shop in-store, and those retailers that can provide something truly different to shoppers will grow market share. Once in-store, it’s less about being a place to purchase items as that can be done online and more about the entire brand experience.
Delivering a near flawless ‘experience.’
At a time when staffing levels continue to plague most retailers, it’s never been more critical to engage the staff that is there not only to serve customers but also create that differentiated brand experience. There are so many tasks and assignments for associates to accomplish it can be dizzying at times to remember their primary purpose – serving customers.
Retailers can help associates navigate this challenge by utilizing their retail insights to focus on the highest priorities – not their priorities, but those of the customer who is shopping in-store. These insights not only provide a unified and integrated approach for the customer journey but positions associates to provide an experience that is consistent, desired and often times memorable.
Price will Trump Convenience.
While luxury brands, grocery stores, and department stores have always been the most susceptible to waning loyalty due to price sensitivity, others are not immune to this challenge. This selling season may be the most promotional in recent memory, with retailers trying to unload excess products that consumers have already chosen not to purchase at current price points.
Salesforce says half of all shoppers will switch brands during the 2022 holiday due to pricing, which means 2.5 billion shoppers worldwide could ditch their brand for a lower-priced competitor. While incredibly difficult to combat this pricing enemy online, the in-store experience can be the best defense with a differentiated and insight-led customer strategy.