Chris Hogue, head of strategy and product for LiveArea, explains how outside of ensuring the commerce site is stable, performant, and mobile-optimized, a focus on performance marketing, merchandising, and customer experience will yield the best return for the money and effort.
Since March the retail industry has been under constant pressure to innovate and adapt how it attracts and engages with customers. The most significant change of course is the falloff in physical store sales due to the coronavirus. Even with stores open again, it’s tough to argue we’ll see traditional in-store holiday shopping levels. Lululemon, for instance, is being heralded as winning the offline shopping comeback with foot traffic down “only” 26% year-over-year.
If you look more broadly at traffic to malls and their anchor stores, the numbers are much worse. Dillard’s, JCPenney, and Macy’s posted monthly visit losses in July 2020 of 41%, 42%, and 44% YoY, respectively. Dig deeper into the weekly numbers and the trend is even more alarming. In June store foot traffic increased dramatically with the euphoria of reopenings. Then, traffic tumbled in late July. This suggests that consumers got their physical store fix and didn’t like the new version.
With lowered expectations for in-store traffic and diminished sales from anemic traffic flows, digital (e-commerce) tactics will play a critical role in shaping holiday season success for retailers — with success being relative this year. Outside of ensuring your commerce site is stable, performant, and mobile-optimized, a focus on performance marketing, merchandising, and customer experience will yield the best return for the money and effort.
Level up your performance marketing
With a greater onus on digital channels this year, gaining visibility, maximizing value, and retaining customers online will be more important and competitive than ever before.
The make-or-break period for retailers, peak season is the epicenter of e-commerce digital marketing activity. This year will be supercharged. With budgets to spend from many missed months, brands will be extremely aggressive in their performance marketing efforts.
As a result, retailers need to ramp up marketing spend earlier than usual. Intense competition aside, this is due to longer and more unpredictable delivery times caused by supply chain strain. Shoppers are starting earlier to ensure they have their gifts in hand before the holiday. Also, with Amazon’s Prime Day coming later in the year (presumably October) consumers will see this as a catalyst to start holiday shopping.
Consumer mindsets are unknown this year, so marketing teams must plan for uncertainty. More assets — creative and copy — are needed along with testing and optimization based on what’s working. For example, adjusting your messaging around gift-giving as opposed to family get-togethers may resonate more since families and friends who don’t live nearby may not get together this holiday.
The year of the merchandiser
Merchandising is always important but this year it is more essential. Its impact on average order value and managing inventory is key.
In-store shopping offers a more organic browsing experience over most retail websites. This experience translates into impulse purchases increasing AOV. According to Forbes, 89% of women and 78% of men who visit physical stores shared that they add additional items to their cart beyond their identified need. By comparison, a lower 67% of men and 77% of women reported adding extra items to their online shopping carts.
This is where merchandising and online customer experience can be game-changers.
Site search is one quick win. Incorporating thematic searches like “cozy sweater” or “fresh looks” enables retailers to showcase multiple styles and looks at a stage in the shopping journey where customers are telling you exactly what they want. Linking to pages offering thematic browsing like “cozy” or “fresh” lookbooks means retailers can showcase a wider range of merchandise and increase the probability that people will add extra items to their carts.
Another reality this holiday season is that supply chains are stressed and retailers may be sitting on merchandise they need to move. Rather than deep discounting, curating bundles that mix old and new merchandise offers the opportunity to draw down that inventory by pairing it with high-demand products and increasing basket size at the same time.
A digital facsimile for shared in-person experiences
Many consumers will avoid traditional holiday activities like family shopping trips to the mall on Black Friday. However, this creates an opportunity for retailers to craft customer experiences in place of these shared experiences. For example, instead of trading links to wish lists, a shared lookbook that families can work on together offers gift ideas and encourages people to connect and collaborate.
Another common experience emerging from COVID is scheduled shopping appointments. Setting aside specific hours for virtual shopping experiences offers directed or free-form browsing experiences and allows sales associates to gain a deeper understanding of each customer’s style and preferences. This approach can personalize in-person and digital shopping experiences.
Conclusion
Peak season as the make-or-break period for retailers is no different than any other year. What is different are the preferred shopping channels and the stakes for retailers after two quarters of disappointing sales. Those that invest in connecting with their customers early, offer innovative ways for families and friends to connect during the holiday season, and speak in an authentic and empathetic voice will have the best chance to win peak season this year.
Chris Hogue is head of strategy and product for LiveArea.