The pandemonium of Black Friday is done for another year and retailers are heading into the holiday season’s homestretch. However, as ever, the field will be comprised of a number of underperformers running at the back and, even in this tough economic period, stores that will emerge as the winners from this crucial period.
The big challenge for retailers is understanding how to differentiate in the eyes and actions of the consumer. If there is a melee of events across the season it is hard to attract consumers to your experience, product, price point, or website when there are so many competing events. Realistically any event that is going to represent a breakthrough event will be about price and that’s bad for your bottom line.
Some observers will try and use Black Friday as a barometer for the season as a whole but it is still just one event, and retailers still have to drive shoppers to their stores and websites throughout December. Black Friday is a great tradition and will continue to be so for many years to come; however, the consumer has been conditioned to expect those great deals throughout the holiday period.
Whether you’re an exclusive luxury brand or a mass appeal discount retailer, you are looking at what levers you’re going to pull, so that you can run with, or ahead of, the pack this season. How retailers achieve that fleet of foot and turn of pace during this crucial time is the result of a number of factors and actions.
Understanding the consumer mindset this holiday season is critical. Accenture’s holiday shopping survey
predicted a mood of control and care for the majority of consumers and predicted that "precision shoppers" would dominate the season, being very targeted about where and what they buy and hunting out the best value. The success of Black Friday this year, could simply be an example of the precision shoppers picking off the best deals.
However, our data also pointed to a silver lining of increased budgets for the higher spending groups of consumers, retailers will have the opportunity to capture the little bit more that is being spent.
If you look at the ones that have got it right with the customer they have remained keenly focused on their customers’ wants and needs and they continue to be able to convert the traffic into sales. The ones that are suffering need to take a step back and fundamentally address their positioning. They must find ways of demonstrating outstanding value to their customers by making offers that protect the brand integrity but also provide value to the consumer.
The luxury segment is one area that has successfully achieved this balance. Although, it is no stampede, we have seen a blush of interest in luxury this year. Luxury can translate into many different things in the mind of the consumer, including the “treat” that tempts the pocketbook of the lower end consumer. The winners in this segment have created a proposition that represents value in the mind of the aspirational, marginal consumer. These companies are offering entry price point items to establish affinity with their brand, and this also gives the consumer a halo effect of being associated with their brand without having to pay the full premium for the next step up.
Certainly retailers are going to need to continue to demonstrate fantastic inventory management, and this requires a sense of trust in their forecasting and ordering systems. Successfully controlling this side of their operations will improve profitability in the face of skinny margins, and for shoppers it will generate excitement and a sense of urgency as products sell out.
Ultimately, I don’t believe that we will see many surprising names amongst the winners this season. However, I do believe that any store can achieve higher performance even if they are not going to be able to turn around the whole year with a strong holiday season. As we move through December, it is clear that the more dramatic the price action then the more desperate the state of the retailer. For both stores and shoppers this season, it is all about balancing the buzz with their budget.
About the Author
Janet Hoffman is the managing director for Accenture's retail practice, which serves over 60% of the Top 50 Global Retailers. Accenture is a global management consulting, technology services and outsourcing company, with approximately 236,000 people serving clients in more than 120 countries.