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News

Hitting a holiday reset

Nov 23, 2015
HRC Advisory President Farla Efros authored the below article for Chain Store Age

Holiday is going to have a new look this year, as retailers take a different approach to the shopping season. As a result of consumers’ overwhelming focus on price, online shopping and free shipping incentives, retailers have been forced to rethink their strategies. As part of our ongoing series of retail industry surveys, HRC Advisory recently spoke with over a dozen top U.S. retailers to gauge what’s to come for the 2015 holiday season.

Deep discounts, exclusive invitations, and greater personalization through the use of beacon and digital marketing are among the key strategies retailers are leveraging to grab share of wallet.  But exceptionally warm fall weather, mediocre Back-to-School and Halloween and soft Q3 results are forcing retailers to re-think their approach on everything from Thanksgiving hours, to overstocked shelves.

So what makes Holiday 2015 different? Below  are the points we found most interesting.

Driving Traffic Online

Despite so much conversation around the importance of driving in-store sales, 70 percent of the retailers we spoke with say they are pushing traffic online this holiday season, in an effort to follow where the consumer plans to shop. In fact, consumers plan to spend an average of 61 percent of their holiday budgets online, where sales are expected to grow 18 percent over last year.  As further indication that retailers are relying on the Internet to bring home holiday sales, 85 percent of those we spoke with will offer exclusive online specials and promotions to ensure a win.

Free Shipping – the New Loss Leader

While free shipping represents one of the most significant costs and challenges eating into retail margins, 80 percent of the retailers we spoke with will still offer free shipping this year. Consumers demand it, and retailers recognize this as key to holding onto customers, and their share of wallet. In turn, they are implementing alternate strategies to compensate for loss of margins, one being trying to drive consumers to choose in-store pick up options. 

To that end, we found that retailers are merging online and offline practices, such as buy online and pick-up in store (90%), reserve online and pick-up in-store (approximately half), as well as expanding doorbuster strategies (70%) for the 2015 holiday.

Hitting the Black Friday Reset Button

While Macy’s and Target will continue to offer Thanksgiving hours this year, retailers like REI, GameStop and Staples are opting out of both the holiday and Black Friday. After years of ubiquitous “all-in” retail participation, Black Friday seemed to have lost its lustre.
  However, it looks like we might be headed towards a return to what it should be – a day focused on big electronics, toys and key fashion pieces.  Tech gifts are still the top items driving doorbuster strategies, as 55% of retailers we spoke with said they are planning some version of a doorbuster with a technology edge.

Leveraging Holiday to Remove Excess Inventory

Although retailers have been vocal about setting limits on discounting, the unseasonably warm weather and soft Q3 have left them with too much inventory.  As a result many, including Macy’s, are being forced to start sales early, turning to aggressive promotions and inventory management practices in an effort to drive higher earnings this year. Seventy-five percent of the retailers we surveyed said they would use this holiday season to sell off excess inventory, rather than fill their stores with special holiday items, so as to make room for a fresh 2016 assortment.

As always, engaging holiday shoppers requires a unique ability to merchandise intelligently and present sophisticated gifting scenarios while maintaining superior service standards.  Whatever the strategy, if the price, product and service are right, the retailer will win.

Farla Efros is president of HRC Advisory, a leading strategic retail advisory firm.

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