In the wake of the news that nearly 60% of British shoppers expect to spend less in retail’s “golden quarter”, as the cost of living crisis continues to bite – and spending on non-essentials is likely to fall by £4.4bn during this period, (down 22% on the same quarter in 2021) what should online retailers and brands be focusing on?
It’s definitely a difficult time for UK retail, with spiralling inflation and energy costs. In September, the government attempted to relieve some of the pressure, with a six-month energy price cap for businesses. However, retailers voiced serious concerns over September’s mini-budget, calling it a “gamble,” after chancellor Kwasi Kwarteng unveiled a series of wide-ranging tax cuts.
Richard Lim, CEO of Retail Economics commented this week:
“Inflation is set to peak at exactly the wrong time for retailers” and “against this weakening consumer backdrop, retailers are also facing a pincer movement of rising input and operating costs which is testing business models to breaking point.”
Positives for online retailers for Black Friday
Despite the bleak economic headwinds, there are some fundamentals that online retailers and brands can focus on in the run up to Black Friday and Cyber Monday.
- With around ⅕ fewer shoppers expected to be out and about this season compared to pre-pandemic, more people will be shopping online.
- Retailers operating in Europe can take advantage of the fact that cut backs in European countries, are projected to be significantly smaller
- Shoppers are likely to buy early, so online retailers can create promotional offers well before Black Friday / Cyber Monday
- “Value” will be the key driver
- Consumers will choose sustainable options where possible
Decision Intelligence ahead of Black Friday
Retailers need to be looking holistically at how to improve the performance of their 4 key levers: advertising, pricing, delivery and returns. Decision intelligence aids significantly with this, by analysing and aggregating the huge amounts of data online retailers have, but which are traditionally kept in different silos, teams or departments. Tracking data in real-time keeps online retailers on track in ensuring that markdowns and discounts for example don’t erode profit margins.
Get ready for Black Friday
For example, Upp is currently ensuring that customers reduce their spend on product lines in their Google Shopping inventory, that aren’t producing any revenue or conversion value. And clients are using Upp’s inventory intelligence insights to make improvements at every touch point of a customer’s journey ahead of Black Friday, and make decisions on discounts and offers.
Upp can offer you a free audit of your inventory performance, on Google Shopping to ensure you make the best use of every item, in every product line ahead of Q4.
Drew Smith, CEO at Upp Technologies has advised online retailers looking to work smarter during the run up to Black Friday saying
“As Black Friday approaches, retailers need to make sure they’re ready and don’t rush into unnecessary blanket discounting of products in fiercely competitive auctions. If offers, free shipping and price promises are part of existing marketing plans, the teams responsible must check their inventory to ensure the deals are accounted for.”
It sounds obvious, but you’d be surprised by how many retailers don’t have the capacity to do this effectively.
Decision Intelligence allows retailers to:
- Push forward the SKUs which shoppers are actively looking for
- Automate discounting in line with consumer demand
- Apply more considered reductions
- Understand the cost of goods, cost of delivery and sales performance of peak inventory before they apply any discounts
- Ensure discounts don’t generate negative revenue.
Online retailers have the capability to place informed bets – don’t waste your advertising budget by betting on your entire inventory, use your data (market, business and consumer) to make informed decisions, allocate budget accordingly and optimize every single department.
Drew’s key advice for Black Friday? “Alongside inflation rising, decision makers have to understand if discounting is a must and question exactly which offers to apply and why.”
Audit Your Inventory
Make informed decisions on your discounts & promotions