With about 50 days until Black Friday, retail consultants and solution providers have been polling consumers to gauge their intentions for the holiday shopping season, and one underpinning trend has quickly emerged: Consumers say inflation will impact their spending.
For industry executives, inflation is also top of mind. And in a poll of executives conducted by CommerceNext and The Commerce Experience Collective, or CommX, retailers are planning to step up the pace of promotions this year due to bloated inventories and consumer concerns over inflation.
Retailers are already in a markdown mind-set. Kohl’s, for example, is pumping up consumers by offering a limited-time 80 percent off sale — across categories. At macys.com, the department store retailer is showcasing a “Fab Fall Sale” in apparel with 25 to 60 percent off until Oct. 10. And on walmart.com, the retail giant is touting rollbacks on more than 1,000 stock keeping units.
“After a year of repairing supply chains and staffing up warehouses, retailers are heading into the 2022 holiday season generally optimistic but facing new challenges that include inflation-spurred consumer attitudes and marketing ROI difficulties,” CommerceNext and CommX said in a statement, adding that report demonstrates “that retailers are preparing to face stiff competition head-on by turning to promotions, email and SMS, paid search, affiliate marketing and a mix of shipping incentives to get consumers to shop this season.”
According to the report, 32 of the retail executives polled said they would increase the number of promotions, which compares to 13 percent last year. But markdowns are not the only worry this year. As Web 3.0 rolls out with its cookieless functions, changes in consumer privacy, which includes the implementation of California’s Privacy Rights Act and other laws, is also causing retailers anxiety.
Veronika Sonsev, cofounder of CommerceNext, said privacy changes “have really hurt paid social by limiting targeting and measurement, and for the first time in years, we’re seeing affiliates and partnerships rise to the second most used marketing tactic after paid search. Ultimately, attribution will be the key to expanding marketing channels. Retailers must go beyond last-click ROAS and implement incrementality testing and/or media mix modeling in order to successfully scale marketing.”
Increasing the cadence of promotions also requires retailers and brands to fine-tune their retention marketing strategies. Brian Walker, chief strategy officer at Bloomreach, which is a CommX member, said while email marketing “still remains the top and most reliable retention strategy, SMS continues to gain popularity with nearly two-thirds of merchants relying on their SMS programs to beef up their holiday sales.”
“SMS, which is often viewed through the same device as email, marketers can embrace an omnichannel strategy that seamlessly connects the buying journey, ensuring shoppers have a singular brand experience even as they shop across multiple channels,” Walker said, also noting that in this “new era of commerce, a widespread adoption of an omnichannel strategy will be essential for building customer loyalty that lasts especially in the upcoming competitive holiday season.”