Retailers can look forward to a healthy holiday season this year, with consumers set to boost their spending. In fact, nine in every 10 consumers plan to spend the same or more over the festive period, according to Accenture’s 12th annual Holiday Shopping Survey.
Encouraging news? Yes, but only up to a point. A successful holiday season is one thing, building a strong foundation for future growth takes something more. That’s why forward-looking retailers are aiming to build deeper customer loyalty all year-round by getting laser focused on data and analytics. They know that, in the era of continuous discounting by huge online players, cutting prices for the holidays in search of a short-term revenue boost is increasingly misguided.
What’s more, with consumer confidence growing, our survey suggests shoppers are less price-sensitive than last year. As a result, fewer plan to take advantage of retailers’ cost-saving or competitor price-matching programs. Nearly a third even say they’ll be happy to do all their holiday shopping in one place, even if it means spending more (32 percent, up seven points on last year).
Ditch the calendar
The imperative now is to improve consumer confidence in the brand throughout the year and transform from shopkeeping to “customer keeping” with a forensic approach to customer data. A familiar message? Perhaps. But it still needs repeating. The reality is many retailers continue to struggle with maximizing the value of their data. As we move into 2019 and beyond, this capability gap will become ever more exposed.
It’s true that breaking down retail silos and pivoting an organization toward customer-focused decision-making is no easy thing to do. But only those who can ask the right questions of their data — and answer them — can position themselves for success in the years ahead. Using smart technologies that can spot patterns in data far more effectively than the human eye, retailers can acquire new abilities to know their customers intimately — now only who they are, but also who are the most profitable ones, how their needs are evolving, and what it takes to win more of their custom.
Understanding customers with new depth
Those with the best data can tailor products and services with new precision, whether that’s through ubiquitous digital touchpoints, expertly curated ultra-personalized services, or retail experiences that respond to consumers’ evolving expectations.
For example, our 2018 survey shows clear signs Millennials are more sensitive to a brand’s approach to inclusion and diversity. In fact, more than two-thirds of consumers aged 21 to 37 told Accenture that a focus on inclusion and diversity in retail promotions and offers would influence their purchasing decisions.
Similar proportions said they now expect to see evidence of inclusion and diversity both as part of the retail store experience and within a brand’s product range. That’s a level of scrutiny most retailers won’t have experienced before. But whether it’s a broader representation of body size and type, gender roles, ethnic minority or LGBT, this is something that they’re really going to have to pay close attention to in the year ahead.
Exploring new ways to sell
Being able to treat customers as individuals also means tailoring the shopping experience just for them. Our survey shows, for example, how social media continues to grow rapidly as a preferred direct shopping channel. The number of consumers planning to use it for holiday purchases has risen two-fold in just 12 months. Similarly, the numbers saying they’ll check Instagram before looking elsewhere online has more than doubled.
With around one-in-seven consumers already now preferring these social media channels for their shopping, retailers need to be alive to the possibilities and challenges. Can your customers buy your products and services directly through social media? Can your supply chain handle a sudden influx of orders following a celebrity endorsement? If not, a radical rethink may well be needed.
Getting ahead of the retail curve
Also consider how customer spending continues to shift away from products toward branded experiences. Our survey shows how “physical” products like toys, clothes and household appliances might be losing their preeminent position as gift of choice for the holiday season, with shoppers increasingly favoring “experiential” gifts like travel, dining out, concerts and theater visits, or “services” such as lawn care, home cleaning and spa treatments.
In fact, less than three-quarters of shoppers say they’ll purchase a physical gift for their loved ones this year (73 percent, down 11 points on last year), while almost half now plan to give an experience or service (49 percent, up 5 points). The opportunity is clear. But committing a brand to delivering exceptional experiences means first defining the customer journey, and all its physical and digital touchpoints, with pinpoint precision. And you can’t do that unless you’ve transformed your business approach to customer data.
Becoming a customer keeper for all seasons
Consumer optimism is rising, and with it a willingness to spend more over the holidays. But retailers can’t just rely on this short-term boost to their revenues. In a challenging market, finding sustainable growth takes something more. It means becoming a truly effective “customer keeper” all year-round.
It means seeing every business decision through a customer lens. It means being much smarter about customer data — whether it’s a retailer’s own or sourced from third parties. And for those accustomed to making decisions instinctively, it means supplementing human intuition and experience with data science and data analytics. Retailers must be in a position to track individual customer preferences and profitability, identify and cultivate high-lifetime-value customers.
That’s how to stay ahead of the retail curve into 2019 and beyond.
Jill Standish is senior managing director and head of retail at Accenture.