For retailers, the pandemic caused a shift that was challenging to overcome. Consumer spending abandoned services in favor of goods, online commerce dominated once reliable shopping seasons for brick-and-mortar outlets, and shopper loyalty disappeared as they chased product availability, forcing retailers to catch up.
Now, retailers face a new challenge: Inflation. Rising prices in food, gas and other staples are forcing retailers to respond to consumers feeling newly squeezed.
This creates an uncertain fate for the holiday shopping season, retailers’ most active time of the year. According to a recent survey, more than half of consumers say inflation is creating stress about buying gifts this season, and three-quarters say they are paying close attention to their spending.
There are already signs that their anxiety is for good reason. This year’s forecast for the season is muted: growth from last season is expected to range between 1-3%, which is below the 10-year average. This contrasts with the buoyant shopping season last year, when sales jumped 14% compared to the earlier year.
The canary in the coal mine for the shopping season has always been what precedes it: Back-to-school shopping. The National Retail Federation reports that overall spending for school shopping, from grade school through college, increased just 2% this year from last year’s record of $108 billion.
For obvious reasons, consumers will be driven by discounts, but that may be difficult this year due to retailers tightening their belts in the face of diminishing sales, a labor shortage, and supply chain interruptions to inventory. For retailers, investing their dollars in long-term solutions is likely the best bet to maintain momentum before, during, and after the shopping season, no matter the year. Here are four ways they can do just that.
- Meet customers early in the season. Moving excess inventory and capturing holiday shoppers may mean breaking tradition and marketing Black Friday deals today instead of the “official” kick-off of the season in late November. Inventory may not be an issue for plastic goods, but when it comes to items sourced in Asia, like clothing or electronics, it would be a good idea to replenish your inventory now to meet demand later.
- Empower your team to focus on customer service. Consumers will always want helpful, friendly service from salespeople who are experts in their field. Shoppers need advice, information, and solutions — and retailers have the advantage of being the only place where consumers can touch the product, smell it, taste it, or try it on.
But hiring employees, never mind experienced and knowledgeable ones, continues to be a challenge. To ease labor constraints, retailers can leverage technology and automation to handle trivial tasks, enabling their teams to do what they do best – help customers. A major benefit to using real-time supply chain visibility is knowing the status of your inventory and when out-of-stocks will be replenished. For example, by working with FourKites to bring greater visibility to its deliveries in transit, PetSmart was able to identify the cause of disruptions to store operations and minimize their impact on staff productivity. And by empowering employees with information you can increase retention — staff members want to be helpful, better insights empower that.
- Offer a hybrid experience. Shoppers want choice and flexibility — stores should strive to provide a seamless in-person and online buying experience. In the ideal scenario, shoppers can drive up, quickly pick up items they ordered online, and then run inside to shop for goods that aren’t best for online shopping: produce, shoes, or fitted clothes. While it may not be realistic for every store to adopt this model, it is possible to get close by beautifying the front of the store or making sure your curbside service doesn’t skip a beat.
Retail spaces can also be repurposed more to focus on the tangible benefits of shopping; when it comes time to purchase, retailers can make it easy to swipe a card and choose a delivery option. Making brick-and-mortar locations showrooms will enhance the shopping experience and potentially stir excitement among those who have strayed since the pandemic.
- Know your inventory. As mentioned, traditional seasonal shopping benchmarks like Amazon’s Prime Day and Black Friday have lost their luster. This is changing the patterns of this season. Instead of focusing on those two dates, retailers now have the power to space out their promotions into a wider time window. Discounting should be based on available inventory, which requires greater visibility.
Labor strikes, weather events and more can disrupt the flow of goods at a moment’s notice. Combined with unpredictable consumer demand, stores can quickly find themselves with unexpected inventory shortages or gluts. By having precise estimated times of arrival and end-to-end visibility, from manufacturers to distribution centers and beyond, store managers can appropriately manage promotion strategies and customer expectations.
While it’s difficult to predict what’s in store for the holiday shopping season, it’s safe to assume that shoppers will be looking for deals, flexibility and service. And with more uncertainty ahead in 2023, these preferences will likely stick around. Retailers who take steps to exceed expectations will have happy holidays and a prosperous new year.