Holiday planning 2020 will be “like no other,” according to Kohl’s CEO, Michelle Gass. To succeed, retailers need to make sharp adjustments to align with changes in consumer behavior caused by the at-home economy.
With 40% to 50% of annual sales at risk during the final quarter of the fiscal year, the stakes are high for retailers, who are under intense pressure to fine tune holiday plans in such critical areas as merchandise management, marketing, omnichannel management, the supply chain, data management, and fulfillment.
Traditional methods, based on historical data and years of experience, will not suffice in 2020. For example, Black Friday door-buster sales are incompatible with pandemic social distancing protocols. Also, winter promotion schedules cannot wait for peak shopping days (Cyber Monday, Super Saturday, etc.) that will spike sales to unforeseen levels and overwhelm e-commerce, order management, and fulfillment operations.
However, with great challenges come great opportunities. So, here are steps retailers can take to help maximize holiday sales and meet evolving shopper demands.
Holiday Season Like No Other
During a recent webinar I participated with key industry experts from the Parker Avery Group and Omnilytics where we discovered that many retailers are chasing a “new normal” or the “next normal.”
However, the truth is “normal” has never been ‘normal’ for long. Retail has always been at the forefront of continuous evolution and re-invention, and the smartest, most successful retailers are those that invest and re-invest in innovation and adaptation to meet shifting marketplace demands.
To succeed in the final quarter of 2020, during the strangest year on record since the pandemic of 1918, here are strategic and discreet steps retailers should focus on:
- Supercharge communication channels. This includes health and social distancing signage in stores, text messaging for opt-in shoppers, and online service and support through chatbots, voice commerce and social media. In an at-home economy, digital communication is king.
- Spread out promotions. Retailers are still reeling from supply chain breakdowns they experienced during the early days of the pandemic. To avoid causing further breakdowns, many retailers are starting their winter sales promotions in September as a way to spread out the selling cycle and avoid disappointing shoppers with delivery delays cause by surges.
- Essential products are the new black. Shoppers are focusing on what they need over what they want, athleisure over fashion, the home over the next new thing, and the family over personal statements. Essential is more than groceries and cleaning products. It includes a wide range of products that shoppers literally cannot live without.
- Omnichannel is (and has always been) king. While e-commerce is currently setting sales records, the key takeaway is that successful retailers who are experiencing massive sales increases (Walmart, Target, Tractor Supply, Big Lots and others) have been investing heavily in omnichannel for years. This includes optimizing e-commerce, mobile, online marketplace platforms, click-and-collect, fast-fulfillment and, yes, brick-and-mortar store capabilities. All channels feed off of each other to create a virtuous circle, which is something that TJX, Ross Stores, Trader Joes and Burlington (all without major omnichannel capabilities) can only dream about.
- Focus on commerce-ready inventory. In the supply chain, inventory is where the rubber meets the road. Every other link in the supply chain is just prologue, including logistics, transportation management, DC/warehouse management, and managing ships, trains, planes and trucks. Key investments in the supply chain should go into maximizing final-mile maturity using advanced inventory management tools that optimize order orchestration, direct-to-consumer shipping, fulfillment, home delivery, click and collect, and curbside pickup.
- Personalize services and communications. In a divisive and worrisome environment, a little personalized service goes a long way. The holiday workforce should not only be trained in health and safety rules but also empathy and de-escalating the fraught emotional state of shoppers. Personalized and reassuring messages should go into all forms of communication, even messages sent for shipment notifications, order confirmations and more.
- Appointment scheduling comes of age. Thanks to the pandemic ,shoppers can now make appointments to enter bike shops, liquor stores and restaurants. Best Buy maximized sales during the early days of the pandemic through appointment scheduling. Walmart and Target extensively use it to set pickup times for online orders. If you are a retailer that offers products and services that shoppers want and need (why else would you be in business?), then you are a candidate for implementing appointment scheduling.
- Fine tune demand data. The number one issue on retailer’s minds today is the importance of demand data in setting holiday plans and how unreliable and inaccurate it has become for providing guidance during a pandemic. Most demand data tools are based on historical sales, which is useless in a pandemic holiday season. Smart retailers will combine all internal data sources: store sales, online sales, mobile sales, loyalty programs, third-party marketplaces, direct-to-consumer and more. They will also add new external sources: social media, competitive data, supplier/partner data and more. Additionally, they will move as fast as they can to aggregating real-time data, which will enable transparency into individual sales by product, store, channel, category and geographic region.
So, how different will holiday season 2020 be? Consider this: were you by any chance counting on Fed Ex, UPS and the Postal Service to be your primary delivery partner for online fulfillment? They have already issued warnings about note being able to guarantee on-time deliveries. Yep, it’s going to be a holiday season for the record books.