Early October Will Make Or Break Holiday For A Number of Retailers
Taking their cue from last year’s shopper behaviors, major retailers are out to win an early share of consumers’ wallets even before the first shout of “Trick or Treat!” Target announced Deal Days for October 6 to 8, Amazon announced its Prime Early Access Sale for October 11 and 12, and Walmart is going all in, stating that “more than half of Walmart customers will start their holiday shopping research in October.” These early sales events put others in the industry on notice — but there are challenges:
- Playing along creates greater risk of October inventory shortages. Attempting to get ahead of expected inflation and supply chain problems, many retailers finalized their inventory schedule as early as midsummer. At the same time, they pushed delivery dates into late October to create a buffer for adjustments should recession worries come to fruition. As sales tend to drive high demand, launching one in early October may create problems for retailers to keep in-store shelves and online offerings fully stocked until early November. However, those merchants unwilling to cede early top-line revenue to competitors should begin working with suppliers now to backfill expected gaps in on-hand inventory.
- Committing to volume requires labor to support operations. Labor shortages continue to plague the industry both in stores and in operations, and holiday hiring may drop from last year. For example, Macy’s has set its holiday hiring target at 41,000, far below the 2021 target of 76,000 (-46%). Servicing customer demand without proper labor support is a high-risk proposition, for poor customer experiences may entice customers to shop elsewhere for the rest of the season. Those retailers looking to compete for early October sales should survey the pool — labor pool, that is — before choosing to jump in.
- Sitting on the sidelines risks losing the holiday shopper’s business. Last year, we found that 30% of US online adults started their holiday shopping in October or earlier. So waiting until inventory and labor levels rise creates the real possibility of losing top-of-mind consumer consideration for the rest of the season. Retailers that can deliver perceivable value early — through offers and discounts as well as flawless execution — will be better positioned to achieve short-term consumer loyalty through December. Plus, consumers always like the idea of saving money — and all the more so in the face of inflation. Fully “two in five [of US consumers] say that inflation will impact their holiday shopping decisions” in 2022, according to Bankrate.
Our advice to retailers: Sit down now with the HR, procurement, and inventory teams and map out feasibility plans for both participating and not participating in October holiday sales events. Identify your strengths and work to capitalize on those in the next few weeks. For example, if in-store labor or stock is inadequate, focus on your stronger distribution channels and encourage customers to shop online for home delivery. If warehousing and distribution labor or inventory is the greater challenge, push out messages that make in-store or click-and-collect shopping more appealing. Given the macro-level conditions across many global markets, wise retailers will be highly detail-oriented in their strategies and purposeful in their decisions.