Retail strategy for the holidays has always been about achieving two, if seemingly contradictory, goals:
- Goal number one — marketing specific products to specific customers to attract and convert them
- Goal number two — selling inventory that minimizes out-of-stocks and overstocks by the end of the season
With many retailers, including Target, entering the holiday season thinking about high inventory levels, it’s tempting to ignore goal number one to achieve goal number two. Is the push to sell really worth it if customers aren’t interested in the products? Instead of disappointing their customers with irrelevant recommendations, retailers must build a holiday game plan that puts personalization at the forefront but that also addresses the inventory dilemma. To get started, here are some recommended steps:
- Use order management systems (OMSes) to reduce end-of-year shortages and overstocks. Some retailers may prioritize fulfilling orders from locations with the shortest possible distance to the customer. This plan makes sense when the goal is to find the fastest speed of shipment but not when it comes to using up inventory. During holiday season 2021, almost half of US online adults we surveyed said they bought items online early to get their orders on time, per Forrester’s December 2021 Consumer Energy Index And Retail Pulse Survey. That’s good news, as customer orders earlier in the season allow retailers to use sources for inventory that may be located farther away. In preparation for the holidays, be sure that your OMS is set to prioritize sourcing from locations where the company’s demand forecasting tools predict end-of-year overstocks — and ignore locations where products are likely to run out long before the online shipping cutoff date.
- Build a data strategy with tech that supports real-time understanding of customer intent. Personalization is hard, and it’s even more difficult during the holidays. Why? Individual customers’ shopping behavior shifts drastically during the gift-giving season, and a single shopping trip will include purchases spanning a range of categories. Retailers and brands should use product recommendation engines that operate in real time. That way, when the customer shifts to the “next gift on the list,” old indicators of what the customer was looking at are deprioritized in favor of new data that indicates that the buyer is shopping for a new type of gift or recipient.
- Make recommendations to customers that help them stretch the value of their wallets. Just 33% of US online adults believe that “Companies do a good job creating relevant experiences for me.” With talk of a recession in the air, and inflation a very real part of the holiday spending story, it’s safe to assume that shopping for value will be a major trend this year. This holiday season, retailers should prioritize recommendations that focus on discounts, specials, and value for money. Almost two-thirds of US online adults find it valuable when companies recommend products that are on sale or offered with a promotion.
Of course, doing personalization isn’t the same as achieving personalization, and getting the experience right for each customer continues to be the gold standard for excellence. To better understand how your company can fine-tune its personalization strategy, connect with me via inquiry or a guidance session.