The holiday season is coming. Will this be a golden quarter for retailers, or will issues peak? If you arm yourself with ideas backed by data, you will win this Q4 more easily.
How can retailers prepare for the pre-Christmas peak in demand that is surely coming in Q4? This is the big question discussed by Ben Sillitoe, a retail technology journalist, and Sam Madden, VP Sales at Adverity, in a recent webinar organized by Retail Gazette in association with Adverity.
At the start of 2020, online retail was around 20% of total retail sales, says Sam. But in May, it peaked to around a third of all retail sales, and is expected to continue to be a huge chunk of retail sales for the rest of the year, tracking at around 15% higher than last year. Indeed, typically constrained sectors such as homeware and electricals are a big retail growth area at the moment. In fact, 44% of people have changed their shopping habits permanently by shifting online over the past few months.
Beat the holiday jitters and plan based on data
Research indicates, however, that consumers are acting cautiously and jittery in the light of the pandemic, though this could mean they will bring forward their Christmas shopping to early autumn. Consequently, retailers should map out multiple scenarios, with “cautious forecasting” in mind, say our experts.
The downside is these jitters will impact retail over the next year or so, and many businesses will shed jobs. This will accelerate structural change, with retailers increasingly going online, or dealing with customers in different ways, says Ben. We’ve already seen a lot of this reshaping taking place this year.
Are you ready for new retail models?
On a positive note, however, retailers could incorporate ‘tough times’ principles in the peak time coming up, Ben suggests. One of these is the merging of ‘bricks and clicks’, something that Currys PC World did by incorporating interactive video with sales representatives in-store for online customers.
Another is the D2C model, where Heinz, for example, sells beans and personalized items directly to the consumer from its website. Retailers like Nike have reduced their reliance on wholesale partners than previously, due to the more intense move towards online direct sales.
A sales model growing in popularity is retail subscription services, covering everything from confectionery to fashion. Sam comments that D2C and subscription models aren’t just giving power to the large retailers, but also the smaller ones, which often struggle with being priced out.
He adds that the more you can analyze the data from those investments, the more you can predict growth, forecast marketing spend and establish ROI. It also helps you to see where the peaks and trends are and tweak your marketing campaign spend accordingly.
Embrace new customer acquisition rules
Black Friday, Cyber Monday and Amazon Prime Day are key dates in the diary for retailers. But the discount era has been around for a very long time, notes Sam. The retailers who will do well are the ones who utilize the different channels available, have a coherent message across them, and put customer’s needs first to build trust, says Sam.
Building trust involves having an open communications channel between the retailer or brand and customers, using clear and frequent communications, and using vehicles such as podcasts and video conversations to engage people.
Add tech on top
Finally, it’s essential for retailers to have tech in place that enables them to cope with the rise in eCommerce, and this ranges from analytics to ‘buy now, pay later’ technology. Many retailers are looking to invest more quickly now, says Ben. And if they’re envisaging or encountering problems, they are able to find the technology to fix it quickly.
He adds that among the tech best suited to peak periods are: web performance tools, analytics, messaging software related to delivery and fulfilment, social tools to gauge sentiment - so retailers can react to what customers are saying and doing - and quick payment technology that makes things simple.