Can you feel the magic in the air, that wonder and excitement of the holiday season? The holidays are still a few months away, but the time to prepare stock and strategy is already upon us. Some stores have even started decorating, attempting to push shoppers to the holiday mindset and capitalize on an early start to gift shopping.
Yet, retailers face unique challenges due to supply chain constraints, rising inflation, and labor shortage. All this will amount to an extra $223B in costs of goods for US retailers in the coming holiday season compared to last year, according to Salesforce. But the hurdles don’t stop there: The July floods that hit China’s Henan province and western Europe have damaged railway infrastructure and manufacturing facilities. Thus, exacerbating already strained global supply chains.
Shopping Season Starts Earlier Than Ever
Further complicating things, the shopping season starts earlier and earlier with each year. In 2020, Covid-19 lockdowns pushed many consumers to begin their holiday shopping even sooner than previous years and move them online. Retailers were quick to introduce promotions early accordingly to maximize sales. Today, the recent resurgence of coronavirus infections indicates we are heading in the same direction in 2021. Some Big-name retailers such as Walmart, Target, Best Buy, and Foot Locker have already announced they plan to close their stores on Thanksgiving. Thus, pushing more buyers to online channels earlier than usual.
According to a survey by eTailInsights, 84% of retailers in the US and Canada predict last year’s trend will continue, and more consumers will move their holiday shopping from in-store to online. 35% of retailers think consumers will buy gifts earlier this season. Yet, expectations for an early holiday shopping season clash with the pipeline challenges facing retailers. This unusual and complicated reality demonstrates how risky it is to stick to old plans and strategies. It emphasizes retailers need to evolve and look for new ways to achieve their ongoing goals and use sophisticated strategies to manage their inventory.
Buyers are Price-Conscious and Less Forgiving
While retailers are searching for solutions, consumers are dealing with their own problems. The miraculous economic recovery has been hampered while governments are scaling back on stimulus and aid plans. Recent indicators from the US Commerce Department show retail sales already dropped by 1.1% in July, signaling consumers are slowing down their spending. Such patterns suggest prices may become a key issue this coming holiday shopping season.
Still, those price-conscious online shoppers may have higher expectations from their online buying experience. Last holiday shopping season, many retailers and brands scrambled to do their best in the situation forced upon them. Many consumers were more forgiving towards retailers having difficulties adjusting their operations to the growing demand for online services. But over the past year, businesses had considerable time to optimize their digital shopping offerings. Consumers now expect better results and a more unified shopping experience across all sales channels. Sellers who used their time wisely and implemented suitable tools and infrastructure will find it easier to meet those expectations.
The Old Ways are No longer Enough
All those different and sometimes contradicting demands, managed by multiple parts of the organization, must be weighted together and expressed in the bottom line: The prices given to consumers. Retailers and brands need to ensure they present optimal pricing points for the right products at the right time, maximizing their KPIs.
The pandemic tremendously accelerated consumer’s shift to eCommerce and amplified supply challenges. The new normal lacks pricing stability and the competitive situation has changed. In such turbulent times, the old ways of setting prices need to be overhauled to ensure all the changing variables are considered and that prices truly reflect the current pricing strategy. Better yet, businesses’ pricing strategies themselves need to be constantly evaluated and evolved. Retailers and brands need to be able to respond quickly and swiftly, study new practices, and reconsider base assumptions while adopting proper tools to do so. They must utilize ways to tweak their strategies on the fly, dynamically, and in real-time.
The holiday season is truly a magical time and the holiday shopping season is a critical period for many retailers and brands. Using the right tools and the right mindset can help businesses secure they will have a happy and prosperous holiday.