To say a lot has changed this year would be an understatement. The pandemic has globally affected consumer spending across all income brackets. Moreover, an increasing number of customers are choosing to shop online rather than shopping at brick and mortar stores. Holiday forecasts predict that 30% of all 2020 holiday sales will happen online (vs. last year’s 23%). Retailers need to step up their holiday pricing strategies to make the most of this holiday season.
Before you begin to undertake your holiday pricing strategy, here are the hottest holiday trends of 2020 to give you some perspective.
2020 Holiday Trends
To avoid in-person shopping risks most customers now prefer contactless shopping. Also, many cautious customers are planning to do their holiday shopping earlier in the year. This is to avoid the late delivery of gifts due to the pandemic-induced long shipping times.
In a study led by Capgemini on 2020 Holiday Shopping trends, it was found that 1 in 3 customers will only go to shops when they know what they are going to buy. Impulsive shopping is taking a backseat this year as one-third of the holiday shoppers are expected to research online before making an in-store purchase.
As the pandemic continues to rage, department stores are getting converted into fulfillment centers, even temporarily. This is a reflection of how retailers are succumbing to the dominance of e-commerce. As of last year, shoppers on mobile have surpassed those on desktop. This means that optimizing the mobile experience is important now more than ever.
Holiday Pricing Tips
1. Deeper and Broader Promotions
According to the survey conducted by Revionics LLC, 45% of holiday buyers said that discounts will be one of the most important factors in deciding where to shop. This means, this year retailers will have to provide deeper and broader promotions to drive sales.
Retailers worldwide are offering deeper reductions than previous years to offset the high inventory levels and slow sales caused by the pandemic. They are continuing to discount broad assortments of goods this year, with storewide discounts being used aggressively. Retailers can take a leaf out of the success of Amazon’s Prime Day where many of the items promoted were likely discounted because they weren’t selling well anyway.
Before you go all out on promotions and deals calculate how low you can price your products without affecting your bottom line. For this, you need to factor in all the direct and indirect costs like the production or purchasing cost of your products, the staff salary, the inventory management cost etc.
2. Market Research
The retail industry is all about repeat business. This is why you do not want to disappoint your customers by running out of stock. Retailers must do their own market research and proactively gauge demand. One of the best ways to go about this to use Google Trends to keep track of holiday wishlists.
Another way to go about it is to pull out the records of previous years’ holiday season and consider key metrics like the most popular items, the average order value, the time periods that brought the biggest spike in business, etc.
Likewise, retailers should examine which strategies brought the highest ratio of profit margin and which strategies performed the worst in the previous years. It’s imperative to make pricing decisions based on the performance of previous holiday pricing strategies.
3. Do Competitor Research
Competitor research is the key to offering the best deals to your customers. The buying process takes a U-turn during the holidays. When the holiday season arrives, even loyal customers will jump ship at the temptation of better deals.
Because of this, retailers need to closely watch their competitors. You can either go to websites and watch for the prices manually (which is very tiresome!) or you can scrape the prices using web scrapers. Using this data, you can price your products dynamically and outdo your competition every step of the way.
4. Ensure Price Freshness
With influencer marketing being the rage these days, a lot of your business comes in from affiliate portals. A common holiday pricing error that you want to avoid at any cost is showing stale prices. It’s infuriating to your users to see a different price on your site after eyeballing a great deal somewhere else.
It is wise to invest in advanced web scrapers, and intelligent price and promotion optimizations to give the best deals during the holiday shopping season.
5. Holiday Sales to Lifetime Value
According to Amanda Bourlier, Head of Retailing, Euromonitor International, the 2020 holiday shopping season will start early and may go on longer than the previous years. It is obvious that there will be a record hike in e-commerce sales. The downside of which is that customers are more likely to return their online purchases than the ones made in-store. Retailers should get ready to make exchanges and returns at a much greater rate than last year.
Further, demand planning is proving to be tricky for most retailers as consumer trends keep shifting so quickly and often in 2020. Interestingly, in January and February of next year, customers may find deeply discounted unsold merchandise.
Instead of freaking out, retailers should focus on providing great value, which is a superb long-term strategy in retaining old customers and bringing in new customers.
6. Provide Great Experience
Ensure customer loyalty through custom packing, express delivery, and free shipping.
Due to coronavirus-driven safety concerns, more and more consumers are demanding curbside pick-up and buy online/pick-up in-store (BOPIS). The year-over-year growth of BOPIS stands at a record-breaking 208%, which clearly points to the customer sentiments. Many retailers are expanding their BOPIS offerings in response to the sudden spike in their popularity. Surely, this is something to look into to provide better customer satisfaction.
The trick to building a band of loyal customers throughout the entire year is to have a sound, long-term pricing strategy. Some of you retailers may be pressed for time as the holiday season is already upon us or may not be too sure on how to keep up with your competitors. Worry not! Reach out to our big data experts at Datahut.