The popular holiday tune, “It’s starting to look a lot like Christmas” hits differently for retailers this year. Sure, the outward signs all point to the holidays being upon us, but things are going to look a lot different this holiday season. Here’s what you need to know to make the most of it.
Despite the stressors of the pandemic — or perhaps in part thanks to them — the past few years have seen some very good holiday seasons. This year, however, our analysts predict things will be different.
With rising inflation, supply chain headaches, and people putting more money into travel, there’s simply less available for people to put back into traditional retail. Plus, it’s a gubernatorial election year, so there will be a lot of noise to distract people from shopping, especially with the country being so divided. To weather the storm, retailers need to set expectations with their stakeholders based on the current climate and the possible changes in demand.
Is there anything we can expect to stay the same this year? Yes, and that’s that the holiday season will keep creeping earlier into fall. This year, holidays will start as early as mid-September, especially for omnichannel retailers and department stores. Realistically, the 2022 holiday season will last somewhere between mid-October up to December 24th (for e-gift cards).
Here are five things to know about the upcoming season:
1. Expect More Pop-Up Entertainment
Speaking of things that will stay the same, e-commerce’s cut of the total retail pie will continue to grow. This year, our analysts expect 21% of all retail to come from digital channels. This trend will continue, unless stores and malls reinvent themselves — which they are.
The past decade-plus has seen the closure of countless malls and stores, a trend that accelerated during the last two years. However, those who survived the pandemic have done so by finding different ways to satisfy customer needs. Retailers have invested in curbside pickup, BOPIS (Buy Online, Pick Up In Store), and ROBIS (Reserve Online, Buy In Store). They’ve made changes to their ERP and POS systems to bring them up to date.
And some retailers have taken the opportunity to reinvigorate their retail presence, through temporary pop-up shops and in-store events. Nordstrom, for example, offers first releases and trunk shows to bring traffic through the doors. Sephora hosts brand exclusives and in-store tutorials, and recently expanded their shop-in-shop partnership to to all Kohl’s locations. Consider how you can bring in-person experiences to your retail locations this holiday season.
2. Prepare for Greater Price Sensitivity
With many consumers feeling the pinch of inflation, we expect to see greater price sensitivity and deal campaigns during the 2022 holiday season. In general, retailers are going to take a hit.
Those who sell basics year-round may have more wiggle room. Rather than decreasing their margins, they can go into the holidays with the knowledge that sell-through will take longer this year. Some of our clients are choosing to buy less into basics this year, while others are planning for a longer sell-through.
If you sell fashions or basics, you need to be thinking, “What is our plan for our sell-through rate? What is our contingency plan, and how far are we willing to play with margins?”
3. Make a Plan for Inventory Issues
Since the pandemic, the industry has continuously faced supply chain and staffing issues. One way to overcome inventory hurdles is to expand your assortment without owning it. Amazon isn’t your only option. There are several marketplaces out there, like Mirakl and Yo! Kart. Through testing and experimenting with dropshipping, retailers can break into other categories without cannibalizing their own assortment.
As for your own website, invite shoppers to be notified when one of your basics comes back in stock. This gives you the option to refill and re-engage the customer to buy back into that product.
4. Make Communication Easier
When it comes to customer communications, there’s been a trend toward less transparency. Whether it’s when their order will arrive or if it will, customers can’t get answers. The brands who stand out this holiday season will be the ones who opt to be more transparent.
There are tools that make this easier for brands. For example, when a customer purchases something through Shop Pay, they receive a text when the order ships (that explains how long it will take), when there’s a delay, and when it arrives. Consumer appetite for this kind of brand communication is at an all-time high, with 93% of consumers saying they want to text with brands.
Two other communication trends we’re seeing are chatbots and automated callbacks. Nearly 40% of consumers prefer talking with a chatbot over a person. Automated callbacks, or virtual queues, can also significantly reduce customer frustration, especially for businesses with high call volumes.
5. Upgrade Your Payment Options
It’s all about cashless convenience these days. Digital payment options like mobile wallets, buy-now-pay-later and cryptocurrency are increasingly popular, especially among younger Millennials and Gen Z consumers, who may not even carry a physical wallet. In fact, around 15% of digital wallet users say they regularly leave home without their physical wallet.
Shopping is moving to the phone, even when it takes place in-store. Retailers need to ensure their POS system has the ability to accept the various options their shoppers are using. Mobile wallets like Google Pay, Apple Pay, and Samsung Pay come pre-installed on phones. BNPL options such as Afterpay and Klarna can incentivize a purchase for someone who can’t pay for everything right now but can do so over time, an attractive option for the 70% of shoppers who go over budget on holiday spending.
If you can only prioritize one thing to get in play pre-holiday, this should be it.
Keys to Holiday Success in 2022 (and beyond)
Finally, regardless of the specific tactics you use for this holiday season, there are three key things retailers should leverage this year and heading into 2023.
- Personalized 1:1 segmentation. Build profiles based on how your customers come into your site, and their journey in that individual moment. Serve them what they want to see. Tools such as Adobe and Salesforce Marketing Cloud make this possible.
- List hygiene. The fall is the perfect time to go in and clean up your list. Plus, asking people to opt back in gives you an opportunity to re-engage interested subscribers before the holidays begin.
- Customer Data Platforms (CDPs). With data coming in through so many channels, everyone should be looking at CDPs right now. From what your customers want to what they’re buying, you’ll have the information you need to anticipate their needs across the lifecycle.
The 2022 holiday season will be different than any we’ve had before. It’s sure to be turbulent, but with the tactics above, your team can succeed.