Katie Woodhead, head of experience optimisation at Attraqt, writes about how retailers can prepare for the challenges of this year’s peak season.
The peak trade season is with us and retailers have been prepping for both the opportunities it brings and the challenges it can pose. Despite the continued 18.1% year-on-year growth in online versus offline sales this year, the UK’s political and economic forces have contributed to relatively flat sales figures overall, placing extra pressure on ecommerce brands to maximise sales during peak in particular. Doing so requires both a pro-active anticipation of current market influences, as well as a tactical strategy to deal with these in a way that boosts customer engagement.
With this in mind, here are predictions on the key influences that are likely to affect peak trade this year, as well as advice on sound strategies to make the most of these.
Uncertainty is Certain
This year’s trading conditions have been hampered by uncertainties surrounding Brexit, and the announcement of a pre-Christmas general election; two factors that could certainly sway people’s peak spending decisions for 2019. Some analysts suggest that the election will distract consumers from Christmas shopping, while others suggest that consumers may now be relieved that Brexit issues have been postponed to the new year thanks to the EU Brexit withdrawal extension, which could effectively reinvigorate consumer confidence. We can only speculate on how these influences pan out. But what is certain is that shopper demand is difficult to predict, making it crucial for brands to prep for key sale occasions like Cyber Monday and Black Friday in an optimal way.
A smart place to start is a focus on the basics; maintaining a high standard of customer experience and ensuring your tech and development teams have prepped your ecommerce site properly. This includes embedding solid infrastructure and extra resources to cope with additional traffic during these intense periods. Slow page load speeds and crashing sites could not only put consumers off your special occasion sale, but also from coming back to your site across the entire peak period.
Pay Day Appetites
This Black Friday falls on pay day, which may mean more of an appetite for spending. Shoppers will have their eye on items they wouldn’t typically spend on. With this in mind, retailers should consider promoting slightly higher margin items during peak. Discounts on this range of items coupled with the extra ability to spend, is likely to be the right formula to help drive sales.
A deeper understanding of consumer trends and behaviour during peak trading is also an informed way of setting the right strategies. Typically, customers tend to be interested in branded products during peak and the opportunity to snag a high price item from their favourite brand at a good discount. Another interesting Black Friday trend of note in recent years, is self-gifting. According to research from PWC in 2018, In total, almost two thirds of UK men and over three quarters of under 25s plan to buy something for themselves during Black Friday. With this and similar trends in mind, it’s possible for retailers to anticipate behaviour and set the right trading strategy to respond to this demographic.
This can be achieved by analysing and factoring in merchandising data too – such as ‘highest discount percentage,’’ popular brands’ and ‘stock availability’. With these metrics, merchandisers can order the online display of products in ways that better prioritise online sell-through.
In order to maximise the high traffic peak period, especially during these uncertain times, it makes sense to tactically merchandise and promote your product inventories in a more personalised way to Inspire your customers. However, increased competition amongst retailers to generate sales has produced a trend of continual discounting across peak over the last few years. In the current environment this is likely to continue. This means that merchandisers must now generate targeted and personalised product promotions across the entire peak period, and not just peak days or weeks in order to cater to a range of customer segments; however, without access to data science and automation, this is difficult to achieve.
Keeping a competitive edge is important, but retailers also need to know when to stop. A number of retailers fall into the trap of offering better discounts than the competitor, but ultimately cripple themselves by making long term losses. Use insights to track how promotions are running and how this is impacting KPIs. Don’t offer competitive incentives like free next day delivery if your warehouse and operations team can’t manage the volume of orders as you’ll only lose customers in the long-run.
This is why it will really pay this year for brands to double-down on data analysis, the use of machine learning and automated merchandising methods. These advances help merchandisers to promote stock in highly efficient and relevant ways, given the ability of AI-led algorithms to easily detect and connect product-level metrics, and shopper behavioural data on a mass scale. These systems also give ecommerce managers the ability to rapidly populate category pages with strategically placed items that fit varied customer and business needs, easily. This way retailers can automatically showcase tempting and commercially viable products to every consumer at scale, without having to worry about manual product placement, potential sell-outs or roadblocks in the customer’s online journey. The value of AI-led automation is that it not only automatically showcases highly relevant products to different shoppers at speed, but it can also handle stock replenishments and alternative product suggestions without any need for manual human intervention when items are at risk of selling out – sold-out discounted products are much more likely to disrupt the user journey.
Importance of International Markets
Brands need to better tap into the commercial opportunities available in different consumer markets during peak. Demand may be relatively suppressed in the UK, but the US is showing signs of continued consumer strength thanks to record-low unemployment levels and economic growth of 1.9 % in the third quarter.
Rapidly emerging markets in Latin America and South East Asia, for example, are also proving to be key catalysts for growth, while consumer spending in China and the Middle East remains lucrative. This means the definition of what and when peak is, varies by market. Retailers and brands must cater to this. China’s Singles Day for example, which happened on November 11th and each year, has once again eclipsed Black Friday as the world’s biggest sales event, with Ali Baba, China’s ecommerce leader setting new records by generating $30.8 billion on Single’s Day alone last year, nearly triple what U.S. consumers spent online in 2017 for Black Friday and Cyber Monday combined.
What all of this means for retailers is that there is a fantastic opportunity to offset potentially slow peak trade growth in UK markets by making sure that customer online journeys are also relevant and personalised in other profitable territories. Automated merchandising and machine learning can prove their worth by enabling brands to efficiently tailor product promotions to local market needs at scale, so that they match the demands of local consumers in a contextually relevant way; for example, a Chinese shopper who is looking to purchase a gift for his loved one on Single’s Day. By showcasing inspiring products that reflect the local requirements of consumers across diverse territories, and not just the UK, a brand’s entire catalogue can be exposed to consumers in high-growth markets that are much more likely to make an impact when it comes to guaranteed conversions. This can make all the difference between stunted growth and impressive commercial success during peak.
A Creative Edge
Price is often the defining factor during peak shopping decision making, but It’s also possible to nurture an emotional and personal connection with shoppers to stand out among the competition. Customers will be inundated with promotional campaigns across the period, all offering tempting discounts, and the key to catching a customer’s eye isn’t always just about offering relevant products at the best price. Brands that are likely to have the edge will offer a more curated approach – from hand-picked products and creative content stories to interactive shopping guides personalised by creative, human merchandisers and not only by algorithms.
By drawing on data insights, it’s possible for retailers and brands to combine both creative input with automation to help bring peak trade campaigns to life, personalised, and at scale. With 2019 peak shaping up to offer new trends, opportunities and challenges, retailers will need all the best tools, insights and strategies in their back pocket to thrive.