MERGE takes a closer look at important considerations for retailers as they prepare for the upcoming holiday season
AJ Workman
October 24, 2023
The holiday season is fast approaching, and retailers are gearing up for one of the most crucial periods of the year. However, this year, more than ever, there's a sense of uncertainty surrounding consumer behavior. Retail brands need to be well-prepared and adaptable to make the most of this season. Here, we'll explore some important considerations for retailers as they prepare for the upcoming holiday season.
Expectations of Increased Spending
First and foremost, it's essential to recognize that consumers are showing indications of an uptick in their holiday spending compared to last year. While the exact figures may vary, it's generally expected that people will be willing to spend slightly more during this holiday season. Per Luxury Daily, even those who are planning to spend less this holiday season have indicated that they are open to reconsidering their budgets, with 54% of total respondents in the study saying they would be enticed by a sale or promotional event. This is promising news for retailers, but it comes with certain challenges that need to be addressed.
Shift to Online Shopping
In recent years, online shopping has been on the rise, and this trend is expected to continue during the holiday season. In fact, data from Experian indicates that there has been a persistent 1% increase YoY in online sales, while in-store sales have seen a 1% decrease. Adding further emphasis is the fact that 30% to 40% of consumers plan to shop online before considering in-store purchases. This highlights the importance of a strong online presence, user-friendly e-commerce platforms, and efficient delivery services.
Inventory Management
While inventory levels seem to have stabilized in most cases, retailers still have concerns about whether consumers will receive their goods in a timely manner. And delays in delivery chains involving FedEx, UPS, and the U.S. Postal Service is only raising apprehensions. Retailers should closely monitor their supply chains, communicate proactively with their logistics partners, and ensure that customers receive their orders on time.
Budget Constraints and Flexibility
Budget constraints are another factor to consider. Some retail brands are pulling back on their spending during the holiday season, although not to the point of elimination. This has been done in effort to establish a “war chest” of sorts to fuel spending throughout the holidays as consumers disclose what they’re going to do. Retailers should prepare for multiple scenarios by creating a Plan A, Plan B, and even a Plan C. Being flexible and ready to adjust to changing consumer behavior is essential for success during the holiday season.
Customer Acquisition Strategies
In addition to focusing on existing customers, it's important to have a strategy in place for new customer acquisition. And the proof is in the numbers. Data from the Meta Holiday Guide reveals that 82% of shoppers are open to discovering new, compelling brands and products. Needless to say, attracting and retaining new customers during the holiday season can have a lasting impact. With that, retailers should focus on creating a positive shopping experience that encourages first-time buyers to return as loyal customers in 2024 and beyond.
The Wrap
The holiday season is an exciting but challenging time for retailers. By keeping a close eye on consumer behavior, preparing for various scenarios, and focusing on customer acquisition and retention, retailers can maximize their opportunities during this important season. Remember, it's not just about selling products for the holidays; it's about building long-term relationships with customers that will benefit your business well into the future. Be proactive, flexible, and customer-centric to make this holiday season a success for your retail business.
