"Should we be worried about a recession?" A question that is increasing in frequency from consumers, retailers, and investors alike, as the last weeks have seen tumult in the stock markets. It's a reasonable question as global uncertainty is mounting - between protests in Hong Kong, Brexit uncertainty, and the US trade tiff with China.
So, are you feeling the holiday spirit yet? While it might seem an inopportune time to talk about glad tidings and cheer, this holiday season will be an important one for retailers all over the world - arguably more important than previous years - to see if retailers can free themselves from increasingly cumbersome debt loads, bad inventory decisions, knee-jerk promotional strategies, and customer experience misfires. Admittedly, I just listed off a lot right there, and if these haven't already been in focus, then honestly the next four months going to be an uphill battle. But if you've been taking the right incremental steps throughout the year, here's where you can turn your attention towards - and win - this holiday season.
Avoid the Promotions Hysteria
I mention this every holiday season and I will continue to beat this drum because most retailers still ignore this advice, which is, don't discount everything all the time! In that stream of constant discounts, there's an underlying, self-destructive message that somehow you're creating product that doesn't merit full price. It's not a good look, and more importantly, it wreaks havoc on your margins.
"But," you say, "how do you dial back discounts when consumers have come to expect them?" Our answer - you do so carefully and using data to guide your decisions. Do you even know what your competitors are doing? Are they discounting every category or promoting certain brands or categories? When are they discounting and for how long? Knowing these metrics is of utmost importance and where you should start.
Brass tacks here - you have a little over ten weeks between now and the official start of the holiday shopping season during which the promotional calendar may be a bit lighter, and you can play with selective promotions - think specific categories or brands of product. Could you extend the full-price window for new products by a week, maybe even more?
Don't forget that you have in your back pocket incentives in your loyalty programs whereby customers can bank points or rewards now, so that they can use them later during the holiday shopping season. It should go without saying that those loyal shoppers are your most valuable.
Make Sure There's Newness
You've been thinking about your holiday assortment all year, and now's the time to make sure it delivers. Aside from offering gifting solutions at holiday, what newness are you offering to drive shoppers to your store? New products, collaborations, and events that are timely and relevant - that include gifting for others and self - will drive both e-commerce and store traffic. If you can layer in there a sense of urgency and limited supply, you're even further ahead of the pack.
Cross-category merchandising is your best friend during holiday and it's also where you can really surprise and delight your shoppers. You want to a deliver a sense of "I didn't know they carried this!" and "I would have never thought of that!" to the browser and mission-oriented shopper alike.
Last but not least, how are you going to communicate the newness? Email and social are your channels of choice, but don't forget to leave room for testing and optimizing in your messaging strategies.
Personalize My Offers
Speaking of optimizing your messaging, you likely do some level of personalization in your marketing. And no matter your level of marketing sophistication, personalization is your ticket to improving customer engagement and revenues. How much so? Research by Infosys showed that, "86% of consumers say that personalization has some impact on what they purchase; and one quarter admit personalization ‘significantly influences’ their buying decisions."
So how do you personalize at holiday, when inboxes explode and advertising inundates? One tactic is to take a closer look at your customer segments and parse out their behavior - including purchases, preferences, and browsing habits - specifically during the holiday season. Chances are those behaviors and patterns will look a bit different from the rest of the year, and by honing in on that seasonal behavior you can better target your offers.
Another way to personalize and reach new audiences is by using "lookalike" features in social media advertising. You use your existing segments - upload these to a platform like Facebook - and they will look for audiences that have similar characteristics and serve them up advertisements.
Focus on Value-Adding Services
Ask yourself, can the holiday shopper kill two birds with one stone when they shop with you? Kohl's had this strategy in mind when they partnered with Amazon on return package drop-off at their physical stores. The results have been multi-fold: guaranteed store foot traffic, a younger shopper coming in their store, and the likelihood of impulse/add-on purchases taking place while they're there.
No, you can't set up these kinds of partnerships overnight, but you can ensure that the shopper sees the full value you're providing service-wise when they shop with you. Whether you're offering BOPIS (buy online, pickup in store) or extended return periods, promote these services alongside products and promotional offers - on-page, through emails and social - so that the customer knows you're offering them maximum convenience.
And at the very least, do not, I repeat, do not inconvenience the shopper during the holiday shopping season. Make sure your store staff has been stress-tested and incentivized to provide good customer service. Lest you think this isn't mission critical, I shall leave you with the following stats:
"More than half of Americans have scrapped a planned purchase or transaction because of bad service."
- American Express Customer Service Barometer 2017.
"Increasing customer retention rates by 5% increases profits anywhere from 25% to 95%." - Bain
As the holiday season nears, check out our other tips for holiday here.