If there is one time of year to deliver a standout retail performance, it’s the holidays. The most diligent of retailers begin their holiday planning months, if not a full year, in advance. Despite this, no amount of early planning can replace the importance of monitoring the competition throughout the first weeks of the year’s largest selling season.
Overall holiday predictions are looking up for the retail industry thanks to a 5.7% year-over-year increase in projected customer spending. Yet, as price continues to influence where 80% of shoppers make their purchases, retailers must often make hard decisions to stay ahead of the curve and close the year with favorable margins. Especially among large brands, customer expectations for lower prices and faster shipping has heightened the competition.
Recently, big box brands have shown the significance of weighing every holiday decision — whether it’s adding pop-up stores or timing a product release — against the competitive landscape. In an effort to drive early demand, these retailers have set an example of how to strike a balance between innovation and execution as time diminishes before the peak of holiday shopping.
With the effects of the weak first half still impacting the retail industry, recent announcements by large brands reveal how changing consumer spending habits are revising traditional selling channels. Take Macy’s, for instance, which has seen a 2.6% drop in sales over Q2. In response to the sales slump, Macy’s announced plans to close the doors of up to 40 of their brick-and-mortars in early 2016, making up 5% of their total physical retail presence.
But with this decision comes a promise to rethink each selling channel, including brick-and-mortar, according to the trends of the thriving technology industry.
“Physical stores remain absolutely vital to our omnichannel strategy, which provides local touchpoints and tailored merchandise assortments for shoppers in nearly every major market,” CEO Terry Lundgren said in a statement to Fortune.
Indeed, Macy’s market shares have held strong as the retailer battles the sales drop with store innovations. In New York, the department store chain has launched Macy’s Backstage, a line of discount stores complete with mobile checkout options, dressing room tablets, charging stations and beacon-based push notifications. Most recently, Macy’s announced the addition of Best Buy pop-up shops inside 10 of its department store locations just in time for the holidays.
The partnership between Best Buy and Macy’s proves how brands can form strategic partnerships with retailers that are not necessarily direct competitors, yet reach a similar audience. Best Buy, which has been lauded among the retail industry for narrowing the gap between Amazon’s low prices, extends Macy’s brand exposure to customers who might not have otherwise walked through the doors of a department store. Meanwhile, Best Buy gains holiday mall traffic, an audience the strip-mall retailer typically forgoes.
Successful product merchandising involves always being aware of the target audience, but also remaining cognizant of how this audience can shift and grow. Just as Best Buy expanded its market, competitor Amazon announced the release of a $50 tablet for the holidays.
In the past, Amazon has struggled to compete with Apple and Samsung who together controlled 42% of the tablet market, while Amazon held less than 1%. Instead of continuing this same battle for this holiday season, Amazon took a step sideways, moving down market to attract a more beneficial portion of the technology audience — those simply looking for an easier way to browse the web and shop online.
Taking into consideration a year of omnichannel trends, retailers are revamping their shopping experience beyond low prices to please holiday shoppers. While traditional retailers such as Macy’s are closing brick-and-mortars to explore alternative channels, long-time online fashion retailers are taking to the streets to gain the benefits of an in-store experience.
Fashion retailer Gilt, for example, has joined a pack of online stores providing in-person appointments for urban consumers. For 64% of shoppers, this sort of in-store experience has a greater impact on purchasing decisions than online research.
Even eBay has announced a way to enhance marketplace shopping, and more importantly, create buzz for the start of the holiday season. As a part of its 20 Days of Deals anniversary sale, the marketplace is sending an Airstream truck to San Francisco, Denver and Manhattan to allow customers to inspect and purchase merchandise right out of the truck. While the sale may not have the variety of its Prime Day predecessor, the decision provides a public relations opportunity directed toward the millennial shopper.
This holiday season, creative marketing and product presentation will be one way to gain the attention of a millennial generation tied to mobile commerce habits. In fact, mobile commerce now makes up >nearly 30% of the total ecommerce sales, not to mention the 81% of customers who use mobile to research products before purchasing to locate the best deal.
No matter the opportunities for marketing or merchandising innovation available to a retailer, all will benefit from making the omnichannel experience as smooth as possible. Follow Apple and Costco’s example of fast website load times, in conjunction with easily accessible customer service on each of your shopping channels. Remember, 87% of customers believe brands should put more effort into providing a seamless shopping experience.
As retailers become increasingly innovative in their competitive strategies, learn from the lessons of big box brands and remain responsive to customer sentiment and real-time data not just in early planning, but throughout the holiday season.