Each year the holiday season comes around quicker than ever, and as retailers prepare for the most crucial time of year, 2023 presents a distinct set of challenges that will test brands’ adaptability, resilience and innovation. Consumers are still feeling enormous financial pressures, and many are heading into this period with little optimism towards their finances. Such economic strain is leading to behavioural changes in the way consumers are shopping and planning their festive budgets.
s. Facing volatile consumer sentiment is nothing new for retailers, but it does present even bigger challenges over the busy holiday season. The last quarter of the year typically sees retailers jump behind any promotional event as a way to entice consumers over competition. What started as Black Friday now extends to Cyber Monday — and for many retailers, even starts weeks before. These promotional events have traditionally seen retailers shift huge amounts of stock and provided bumper sales to round off the quarter. But with the economic climate casting a shadow over consumers’ appetite to spend, the competition over wallet share has intensified. While jumping on these retail events can offer a quick boost to profitability, if brands continue to offer customers less for more, they risk harming their long-term health. The shapeshifting consumer Mass economic uncertainty has caused many consumers to cut back and make trade-offs on their spending. The reserves many may have had from money saved during the pandemic are running out, and persistent inflation is stretching budgets more than ever before. Consumers’ spending habits over the past year have been unpredictable, and this has turned many to favour immediate cost savings over brand loyalty. But this shouldn’t just be a retail race to the bottom. Knowing your consumers is paramount to planning the holiday season effectively. Consumers have been adopting various strategies to manage their budgets, but they expect more from brands to support their lifestyles. We’re seeing consumers adopt creative yet practical ways to stretch budgets, taking over the traditional big spending that comes with the festive season. This comes in the form of opting for collect-from-store versus paying delivery prices, buying in bulk, buying own-brand, or going down the homemade route. Understanding these spending habits can help retailers play an active role in creating a deeper connection with consumers and developing better strategies that drive new revenue options — rather than just jumping on the next-best promotion. This can take the form of communicating with consumers the ways to extend the life of items, creating budget-conscious gift guides or DIY gift ideas, or being upfront about the cost of returns or choices for delivery. In the long term, this type of transparency and communication can endure brand loyalty beyond the holiday season. Making use of your customer data In the face of this, agile marketing and sales strategies are more critical than ever, requiring the ability to adapt to campaigns in real time. It’s not just about selling a product; it’s about connecting with your audience. This means getting through to your consumers and understanding what they need, when they need it, through a range of channels that entice and engage them. Generative AI is a game-changer in this context, advancing marketers’ ability to highly personalise content at an unprecedented level. But this is just one layer. Customers will remember brands where they had a more positive shopping experience and brands where they did not. Investing in your store and your workforce comes in tenfold at this time. By analysing data related to local consumer preferences, shopping patterns, and demographics, retailers can curate an optimal store layout to align with shoppers’ expectations. When the layout achieves the ideal flow, it not only enhances the overall in-store experience but also reduces stress during the holiday rush, making shopping more convenient and enjoyable. Workforce management is also especially crucial at this time of year and the need for agile talent strategies becomes increasingly pronounced. Organisations must cultivate a workforce that is not only adaptable but also well-prepared, informed, and driven, especially in terms of technological competence. Such management is vital to sailing through the heightened demand experienced during the holiday peak, ensuring operational excellence and customer satisfaction. In these challenging periods, brands must recognise that traditional holiday shopping strategies may not cut it in 2023. Companies should realign their strategies to connect with customers on a deeper level. A more refined, data-driven comprehension of consumer preferences and focus on consumer experience and desires will help retailers navigate through the competitive season.