Holiday Trends
Retail

Ready, Set, Sell: 7 Tweaks Retailers Can Make Now to Maximize Holiday Profitability

By Lorna Garey, Brainyard Staff
  • Looking for an edge as Black Friday, Small Business Saturday and Cyber Monday bear down? To start, fine-tune your email marketing. Here’s how
  • Creepy personalization is out. “Instagrammable” moments are in. And yes, Instagrammability is a thing
  • Now is the time to do a final check in with your outsourced partners, from cloud providers to delivery firms, to confirm they can ramp up
  • Want to really stand out? Maybe this is the year to opt out

You’ve got the big stuff down, like fine-tuning your marketing strategy to capture Gen Z, embracing omnichannel retail, optimizing your supply chain, and researching competitive pricing and activity data. Maybe you’re even all in on one of 2019’s hottest trends, a buy-online, pick-up in-store, or BOPIS, program.

But this year, you need an extra edge. A compressed holiday timeline means Cyber Monday falls in December instead of November, so shoppers have six fewer days between Thanksgiving and Christmas versus last year — and Hanukkah begins late, on Dec. 22 versus Dec. 2 in 2018.

Not only does that affect year-over-year reporting and budget allocation, it means you have a compressed timeline to capture revenue from shoppers who don’t think about gift buying until after they sleep off the tryptophan blast.

Large retailers, expect more competitive mojo from local shops: In 2018, according to the Small Business Saturday Consumer Insights Survey from American Express, spending at independent retailers and restaurants on the Saturday after Black Friday reached a record high of about $17.8 billion, a 38% jump.

There are other challenges, too. We worked with consulting firm The Retail Doctor and Wakefield Research to survey 1,200 consumers and 400 retail executives in the United States, the UK and Australia. Some highlights: 80% of consumers don’t feel the personalized shopping experience love both in-store and online. And 58% say they’re uncomfortable with the way stores use technology to improve personalization.

NRF Projections Show a Merry Picture

Translation: Your chatbots aren’t fooling anyone, and AI can easily veer into creepy.

As we discuss in our dissection of the Retail Consumer Preference survey, 79% of retail execs say implementing advanced technology will slightly or significantly increase sales. Consumers are decidedly cooler. What they do want from physical stores is for them to be consistent with online (36%), to offer simpler layouts (35%), to let shoppers get staff service with their mobile devices (29%) and self-checkout kiosks (23%).

All these are longer-term efforts. For now, it’s crunch time. What’s a retailer to do?

1. Get customers to make their own personal shopping experiences by giving them socialization tools.

“We’re seeing brands maximizing the ‘Instagrammability’ of both their stores in general and their product displays,” says Kelly Fritz, marketing manager for Coloredge, which provides visual marketing solutions for the likes of Cartier, Nike and Sephora. “It's no longer enough to just print a sign and post it near a product. Customers are looking for items that are incredibly eye-catching or beautiful, set in a larger store environment that's modern, charming and fun.”

This goes hand-in-hand with the trend of retailers leaning into the idea of making shopping “experiential.” Fritz says the large retailers she’s working with are spending a lot to create holiday pop-up shops within their stores, build splashy display pieces and dress their windows to the max to draw customers in.

In San Francisco, Macy’s has puppies in some of its windows, working with the local SPCA. Cuteness overload plus a social cause.

Take cues from the world’s most Instagrammable stores: Add some local art and warm lighting, swap out focal-point pieces regularly, and consider a “backdrop” where shoppers will want to take selfies. Plant walls are particularly popular.

While it may be too late to come up with a fully stocked pop-up shop, there’s still time to incorporate small touches, like vinyl window stickers or smaller, decorative point-of-sale installations, says Fritz.

But there is more to creating an Instagrammable store environment than using beautiful displays and graphics, says Greg Zakowicz, senior commerce marketing analyst with Bronto.

“Think about creating or combining less-staged experiences inside of your stores, such as by offering free gift-wrapping, holiday cookies, hot chocolate, coffee and tea,” says Zakowicz. “These seemingly simple offerings can not only help create a socially shareable experience but can be promoted across your marketing channels.”

These experiences are especially effective if you offer buy online pick-up in-store, where you want to encourage shoppers to linger rather than grabbing their orders and running.

Use 2019 as an opportunity to learn what your customers want to socialize. Trial some creative displays now, track what customers post and build on that insight through the year.

“The desire for engaging retail environments isn’t going away,” says Fritz. “If anything, competition to create memorable in-store experiences during the holiday months will only get fiercer.”

2. Come up with a unique promotion that makes you stand out.

“There are six fewer days between Thanksgiving and Christmas this year — use the short timeline to your advantage,” says Marissa Allen, VP of strategy with digital marketing agency Wpromote, which works with retailers including Charming Charlie and DirectBuy. “Help shoppers stay on track by calling this out in your messaging.”

For example, a local retailer could still launch a campaign around whether a customer really wants to trust that a gift will arrive on time, given a compressed online buying cycle and record numbers of ecommerce shoppers. Lately, Amazon’s two-day Prime shipping has, for many shoppers, become decidedly hit or miss. That “Prime” logo no longer means automatic two-day delivery.

Winter Holidays 2019 By the Numbers

Allen also suggests promoting personalization by recognizing your most loyal customers.

“Offering early access to email promotions is a great way to show your VIPs that you care,” she says, “It gives them a head start and rewards their loyalty to your brand throughout the year.” You don’t even have to develop a unique promo. Simply providing exclusive early access changes the perception for customers who receive that offer.

Gift guides are also a tried-and-true strategy. They can be pulled together quickly based on your inventory, and you can add a personal touch. But again, be creative.

“Think beyond men versus women versus kids and find categories that speak to your audience,” says Allen. “Are they sneakerheads? Bookworms? Use the terms they would use to describe themselves. Basic guides for ‘what to get mom’ don't feel as personal.”

3. Use the “Cyber 10” and new-customer incentives now to seed future sales and profits.

As holiday discounts continue to arrive earlier and earlier each year and buyers show more willingness to shop before the frost is on the pumpkin — the NRF says about 40% of consumers begin holiday gift hunting before Halloween — retailers are constantly jockeying to get a leg up on the competition.

“This has given rise to ‘Black Friday week,’ and in turn, has paved the way for the ‘Cyber Ten’ — a ten-day discounting period starting the Sunday before Black Friday and lasting through the Tuesday after Cyber Monday,” says Zakowicz. By offering Black Friday deals early in the week, retailers hope to attract customers willing to spend now.

But there’s more to be gained by early discounters than current revenue. This is the time to use creative marketing to acquire new buyers and convert them to repeat customers and, eventually, influencers.

Retail CFOs know the stats on customer acquisition vs. retention, customer experience and customer lifetime value. American Express found that 33% of customers will consider bailing to a competitor after just one poor experience. The Marketing Metrics rule of thumb is that the probability of selling more to an existing customer is 60% to 70%. The probability of selling to a new prospect? Five percent to 20%.

And Gartner says 80% of future revenue will come from 20% of your existing customers.

“One of the hardest parts of improving profitability is getting that ‘first’ sale,” says Damien Buxton, director of UK-based web design, SEO and marketing firm Midas Creative. “So offer something extra when that initial purchase is made.”

For example, a voucher, discount or free product on the purchase of another product between two set future dates both thanks customers and encourages them to become repeat buyers.

“Take the time between now and Black Friday to plan your promotion, and end it in mid-December to attract repeat business from festive shoppers,” says Buxton.

4. Use those incentives to recruit yourself some micro-influencers.

If you picture Beyoncé or a Kardashian when you think of influencers, you’re missing an opportunity. Retailers are taking advantage of “micro-influencers” — people and a zoo-load of animals with under 100,000 social media followers — to promote products with posts instead of sponsored ads. One study by expercity showed that 82% of consumers are “highly likely” to follow a recommendation made by a micro-influencer.

Who's on Instagram?

Want to get even more trendy? At a recent operating partners conference, we heard about “nano-influencers,” regular people with a few hundred to a few thousand specialized or hyperlocal followers.

Note that while getting your top 50 or 100 most socially active customers to feature a product or service in exchange for that product can be effective, there are FTC rules, says Forrester principal analyst Jay McBain.

“An influencer can reveal his or her connection to a brand through the content of the post itself,” says McBain. “For example, a blogger can state that a brand sent a product for free and that he or she is giving the product a try. Since the connection between the brand and the blogger is clear, there’s no need for an additional disclosure.”

However, this type of disclosure wouldn’t be enough if the blogger got the product for free and got paid for the work. Some influencers prefer to keep things simple and don’t necessarily want to spell out the details of their partnership with a brand. “The FTC’s OK with that, as long as the disclosure is clear and upfront,” says McBain. “Typing three little characters, #ad, before the start of a tweet or Instagram caption is usually sufficient.”

Zakowicz also cautions that, when using influencers, it is critical to think beyond social media.

“Last year, only 2% of retailer sales during the Cyber Five were a result of social media, compared with 23% from email marketing,” he says. “If you’re using influencers as part of your holiday marketing strategy, find ways to incorporate them into your email marketing campaigns.”

For example, you could feature a select influencer’s top gifts for the season, favorite holiday outfit or other feature that makes sense for your brand in a gift guide. Including a hashtag in those emails can extend the promotion if you ask subscribers to follow the hashtag on social for the influencer-approved favorite of the day.

5. Plan now to avoid an unpleasant — or worse — customer experience.

For ecommerce retailers, at this point avoiding a fiasco means last-minute load-testing and making sure you have a plan to respond to problems from the mundane to the catastrophic, like a DDoS (distributed denial-of-service) or ransomware attack.

Brick-and-mortar retailers should prepare for the crowds that might respond to a Black Friday sale. “Shoppers can go crazy to varying degrees,” says consumer psychologist Bruce Sanders.

Sanders advises retailers to:

  • Have store staff wearing name tags talk to shoppers waiting in line. Because they lose some of their individual identity, and therefore their sense of individual responsibility, people in crowds are driven to actions they would not take otherwise. Name-to-name contact can head this off. Better yet, invite people in line to fill out a sweepstakes form with their names, emails and other identifying information.
  • Distribute sale items throughout the store and provide clear directions. Your objective is to evenly spread out the crowd. When people are packed together, they are more likely to panic and strike out aggressively.
  • There are actions you might think would work well but could backfire — for example, uniformed security guards. Some people become less anxious and more responsible when they see staff in police-style uniforms. Others get agitated and angry. Know your customers.
  • Extending the hours of the event may be a good idea, within limits. Spread sales too much and you lose the excitement that drives buying.

Other psychological trends Sanders sees in play: Consumers are gravitating toward sustainability, as evidenced by the rise in “slow fashion.” And, the BOPIS phenomenon has a basis in human nature.

“Ecommerce retailers, from small ones like Warby Parker to gigantic ones like Amazon, are opening brick-and-mortar outlets,” he says. “For many consumers, shopping serves a social function. Smart retailers have both a brick-and-mortar and an online presence.”

And, they have an app that ties the two together. Nike and Lowes are great examples.

MCommerce on the Rise

6. Show customers that you give back during giving season.

PwC’s Retailing 2020: Winning in a Polarized World report predicted that “shoppers will pay a premium for products or services that reflect their values, or for products that accomplish very specific things — a new premium that will require brand transparency, global and health-related preservation and social purpose.”

Zakowicz cites this thank you from Forever 21 as an excellent example of an effective and socially conscious communication.

Some companies are going further and basing the entire business model on the trend toward awareness of social purpose. Calloway Cook, for example, set up his supplements company, Illuminate Labs, as a benefit corporation, meaning he must consider whether a business decision delivers a positive impact on society, workers, the community and the environment rather than just maximizing profits. Every fiscal year, Illuminate donates 5% of its profits to a charity that funds research into childhood cancer.

“Highlighting any social mission your brand has will help generate sales this holiday season,” says Cook. “Every year consumers care more about the social values behind the brands they purchase.”

As we discussed in our end-of-year tips for nonprofits roundup, fully 22% of annual giving happens in the last two days of the year. So, there is still time for retailers to select a cause that makes sense for their brands, craft a message and communicate it to customers.

7. Staff up on the back end, not just in customer service

“A company like ours will do 40% of annual volume between Nov. 20 and Dec. 20,” says Drew Cook, CFO and head of operations and wholesale at Pact. “Operations, from fulfillment to shipping, aren’t made to support those types of spikes in demand.”

Cook says the apparel retailer avoids costs, including expedited shipping and customer service inquiries, by prepping the distribution center for this level of volume. That may mean incurring additional costs to staff up in the lead-up to holiday, but he says it will pay off easily through the avoidance of two- and three-day up-charges necessary to offset delays in shipping orders, less overtime needed at the warehouse and avoiding inbound customer service demand from slow fulfillment turnaround.

“It also ensures that we provide a great experience for our customers,” says Cook. “If we become an easy choice for gifting, we can acquire two customers for the price of one: the gift giver and the recipient. This can help offset the rising cost of customer acquisition during the holidays.”

Pact works with a third-party data center, and Cook says it’s up to them to be able to staff up during holidays, typically via agencies: “In most cases, this is something they really sell as a core competency and should have a proven record of being able to do successfully.”

Now is the time to do a final check in with your outsourced partners, from cloud providers to delivery firms, to confirm they can ramp up to support spikes in demand. If you don’t like the answer, consider whether they can support your long-term growth. Here are some best practices in evaluating third-party suppliers.

Or, You Can Stand Out by Opting Out

It’s a bold and, perhaps, drastic choice, but some companies are simply declining to buy into the holiday frenzy.

“We chose to opt out of Black Friday last year due to the fact it’s become a complete race to the bottom,” says Nathan Thompson, head of digital marketing for luxury home brand Pavilion Broadway.

For the past four years, outdoor retailer REI has given staff Black Friday off. This year, it’s not only staying closed, it’s adding a service component by asking customers and employees to get outside and join a nationwide clean-up effort.

While some retailers frame the decision as a way to protest mindless consumerism, there are solid financial reasons as well.

“With the noise online as loud as ever during these periods, extreme reductions are the only thing that attracts customers’ attention,” says Thompson. “We believe this is a pricing strategy that benefits only the largest corporate retailers and damages small businesses already on tight margins.”

Thompson, who previously worked for a U.S. furniture giant, says that eventually more retailers will phase out their major deals on Black Friday and Cyber Monday so that they can better control the messaging and narrative.

“There is quite a considerable backlash at the moment, which I certainly noticed last year through friends working at other major retailers, including in the U.S.,” he says. “I actually think there is more of a statement to be made in opting out, especially with the current tide of conscious consumption and buying goods that are built to last.”

Lorna Garey is executive editor of Brainyard. She was formerly editor in chief of Channel Partners and Channel Futures and content director, digital, of InformationWeek. Got thoughts on this story or want to contribute to Brainyard? Drop Lorna a line.


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