‘Tis the Season: Top Strategies for a Profitable Holiday Season

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‘Tis the Season: Top Strategies for a Profitable Holiday Season

By Cheryl Sullivan - 11/26/2016
According to the National Retail Federation (NRF), 2015 sales increased three percent to $626.1 billion, which was solid growth even though retailers faced some harsh challenges such as tough weather conditions, inventory changes, consumer technology advances and retailers’ big discounts. For this year, NRF predicts retail sales to rise 3.6 percent in November and December to $655.8 billion – an acceleration over last year's three percent increase. In addition, online sales are forecasted to increase between 7 and 10 percent over la
st year to as much as $117 billion.

This is a very positive forecast, but every year retailers face steeper and steeper competition during the holiday season and this year will be no different. And with Walmart’s Jet.com acquisition and their aggressive expansion into grocery and apparel, the retail holiday landscape will become a lot more interesting and much more challenging. 
                    
Who will come out on top this holiday season? With the right execution, it’s the retailers who embrace strategic, data-driven pricing and promotions. 
 
Last Year’s Trends:
According to a 2015 holiday pricing trends report by Marketyze (December 5 - January 4), a Revionics company, both Walmart and Jet.com were more aggressive in challenging Amazon’s price leadership position in the seven holiday categories: consumer electronics, toys and games, health and beauty, sports and outdoors, arts, baby products and home and kitchen.
 
In addition, last year Amazon’s pricing before, during and after the holiday season showed that Amazon increased its prices more frequently than it decreased them, and their price decreases were deeper than those of other retailers. Jet.com continued to match Amazon in terms of dynamic pricing,  changing prices across 91% of its gift product assortment during the report period.
 
Win-Win Holiday Pricing and Promotional Strategies
For this holiday season, retailers that want to ensure they achieve optimal profitability, customer loyalty and healthy margins need to follow these steps:
 
· Adopt a consistent pricing and promotional strategy that adheres to company pricing rules, vendor policies and competitive positioning.
 
· Ensure you have visibility into shopper price sensitivity, competitive pricing, cost changes, seasonality and other relevant data points that should inform your pricing and promotional strategies. 

· Leveraging predictive analytics and forecasting, know how your shoppers and competitors will react to your pricing and promotion actions. 

· Stay ahead of the competition by ensuring you have access to real-time and historical competitive price and promotion data and insights. This allows you to optimally plan your price and promotions strategies against the competition. It also enables you to know when it’s necessary to react and, equally important, not to react to what your competition is doing.

· Ensure you plan, forecast, simulate and analyze promotions across all channels and promotional vehicles, including maximizing vendor funds. 
 
Avoid promoting as a knee-jerk reaction. Instead, begin to incorporate your strategies and financial objectives into your promotional campaigns, driving maximum value.  Know which combination of promotional vehicles your shoppers will respond to and which ones you should avoid. If you follow these steps and ensure you leverage strategic, data-driven pricing and promotions, your organization will come out on top this holiday season. 

Cheryl Sullivan, Revionics Chief Marketing and Strategy Officer