With Black Friday/Cyber Monday and the 2022 holiday season fast approaching, is your brand prepared to crush Q4 sales?
Whether you’re a retail, direct-to-consumer (DTC), or omnichannel brand, the rising customer acquisition costs (CAC), a potential recession, and rapidly evolving consumer preferences will have an impact on how you should approach this 2022 holiday season. These factors may serve as a challenge for some brands– but, as with most changes, leaders in the space see the opportunity to set businesses up for success.
As an omnichannel commerce agency, our retail and DTC experts are here to provide brands with strategic insight and actionable tips that will help them prepare for the upcoming BFCM and holidays. We’re sharing our omnichannel commerce perspective on how to prepare for the upcoming holiday season via vertical-specific video podcast episodes accompanied by a written guide.
Below, you will find our video podcast episodes, each featuring a panel of experts from our service-specific departments, segmented by vertical to provide brands with the most relevant information possible. Whether you’re a CPG brand in retail, a fashion brand selling DTC, or any brand in-between, we’re here to give you the industry-aware advice you’ll need to get ready for the 2022 holidays.
Continue reading for a written recap of the whole series and advice on key business areas! You can also view all the session recordings:
- Episode 1 – Consumer Packaged Goods
- Episode 2 – Fashion + Apparel
- Episode 3 – Beauty
- Episode 4 – Food & Beverage
- Episode 5 – Consumer Electronics
Our Advice: Key Business Areas For Holiday Commerce Success
In each session of this BFCM + Holiday rep series, we’ve discussed five key business areas that will be important to brands’ success during Q4 and beyond:
- Pricing + Promotions
- Campaign Planning
- Data + Insights
- Inventory + Fulfillment
- Potential Recession Planning
Here, we’re giving you an overview of the best snippets from our podcast episodes. Read on for our panel experts’ advice in each given area, for each major vertical.
Pricing + Promotions
With issues around supply chain and consumer concerns about inflation, our team thinks we’ll generally see longer durations of promotional pricing than in the past throughout this Q4. When thinking about holiday discounts, deals, and promotions, these are the key considerations for each vertical:
• With inflation and recession concerns, you don’t want to have sell-through issues. Your promotional efforts should focus on selling products sooner rather than later.
• Showcase as much consistency across channels when it comes to deals and discounts. Especially in CPG, where consumers might shop both in-store and online, they don’t want to feel like they’re being tricked by one channel over the other.
• Take advantage or retargeting when showcasing your promotions. A lot of pre-shopping happens before holidays.
• If you sell in-store, keep in mind that retailers create value through key items at sharp price points. Brands that aren’t focused on discounts need to incentivize purchase through giveaways, etc.
• Deep deals & promos are a big focus this year. Retailers are under margin pressures right now, and if you sell through them, this is what they’re looking for.
• There will be increased focus on “value” throughout the holiday season. For example, gift sets show the value of items.
• Invest in the right promotional channels. Promote deals via TikTok and Instagram campaigns.
• Protect your margin and incentivize consumers looking for deals. This can be done through short bursts in sales, flash sales, and exclusive offerings.
• Find ways to create value without a straight discount using bundles, tier promotions and gifts with purchase
• Gauge the market for pricing thresholds. Gen Z especially is looking for more affordable beauty products and Sephora is becoming more price sensitive. Use deals (such as bundling) to incentivize impulse purchase.
• Leverage the heavy research phase right now. Consumers are planning early, but they’re going to wait to shop until they see a sale.
• Keep in mind the two categories of Food & Bev during the holidays: easily gifted (easier to buy online) and used for entertainment (usually bought in-store).
• Work with your retail partners on pricing. Figure out what you need to price to keep your lights on, and then be transparent with retailers about what you think your pricing strategy should be.
When it comes to food & bev products, everyday low prices are usually the way to go!
• Omnichannel brands can’t be in a position where they cut prices online while selling at a higher cost at retail. But you could offer bundled products when you sell DTC, and this may incentivize users to purchase from your website.
• Promo activity will be pulled up into October. Experts predict the three-month holiday timeframe will include promotions all throughout rather than a smaller window.
• Don’t forget about targeting last-minute shoppers! Last year, more consumers were returning to stores to pick up last-minute items.
With high customer acquisition costs, high competition for ad space, and an unprecedented holiday season approaching, planning your media spend will need to be strategic from Q4 through Q1 2023.
• Pre-plan. Get new audiences in the funnel beforehand so that you don’t have to spend too much money on prospecting new consumers in the middle of the holiday peak.
• We see costs rise 25% for paid media around this period of BFCM. Figure out if your brand might want to run campaigns after this timeframe for cheaper ads.
• Focus on daily and weekly pull-through will be more significant than years past because brands might need to make adjustments very quickly. Keep an eye on trends, logistics, and your data at all times.
• Capitalize on the post-holiday moment to learn about and capture new consumers. People start thinking about new year goals- a lot of marketers skip over and don’t take advantage of this time period when users are scrolling feeds and have money to spend.
• Motivate consumers to check in for deals online. For example, have social media influencers generate excitement around special deals and discounts.
• People are doing their research early, so brands need to be showing up. Focus on brand awareness + education early on so that you’re top of mind when consumers are making the purchase decision.
• New year, New You! Many consumers shop for themselves as well as others during the holidays. Make sure to tailor your messaging to include self indulgences.
• Meet shoppers where they are. The pandemic has accelerated the growth of eComm but a majority of purchases still happen in stores, reinforcing the importance to adopt an omnichannel approach.
• Diversify channels for better results. During the pandemic, many brands moved their media budget online but now that consumers are back in store there is a pressure to re-engage with retail partners to combat rising CAC and weak ROAS.
• Time your promotions just right. Holiday shopping starts earlier every year but if budgets are tight, consider having promotions after BFCM. Many shoppers will buy gifts until the last minute.
• Use owned channels to stay profitable. Discounts aren’t the only way to provide value during the busiest time of the year. Use owned channels to help your customers find the right gifts for their loved ones with educational content, shopping guides, and added convenience.
• Plan enough inventory. There is nothing worse than running out of stock during peak shopping season. Make sure you are planning enough inventory to last you through December and start the new year strong.
• Prepare for post-holidays surges. The start of a new year is always an opportunity of reinvention. Make sure to adapt your messaging to match the consumer’s mindset shift from “buying for others” to “buying for myself”.
• The early bird gets the worm. As always, starting planning early is the best way to set yourself up for success but don’t limit yourself to the holidays, plan the holidays with Q1 in mind as well.
• Explore organic and owned media tactics. Create livestream recipes (read our General Mills livestream case study), capture brand loyalists with value, leverage social commerce and storytelling.
• Allocate budgets strategically. Food & beverage is not linear and also a very competitive category. Make sure to allocate your media budgets carefully during the holiday season and don’t hesitate to shuffle things around based on performance.
• October is the new November. One (1) in thirty (30) consumers expect to start researching tech purchases in October which is why it is important to start with a full funnel marketing approach early in the season.
• Tailor audience targeting. Don’t waste media dollars on unqualified audiences. Use retargeting and lookalike audiences to ensure your media dollars are targeting consumers who fit the bill.
Data + Insights
With a new kind of holiday season that will involve many types of sales channels, it’s important to take advantage of all the data your brand has access to, and to identity gaps.
• Understand the human experience. Experts use user research methods (like survey, usability testing, concept testing, etc) to understand what data can’t tell us.
• The power of first-party data. Between what gets collected on DTC websites and by retailers (through media networks), marketers are getting access to more data than they ever have before to educate their decisions.
• Setting yourself up for success. It’s important to define success prior to starting any research. For example, you might start with a clear simple question such as: “how often should I communicate with my customers?”
• Eliminate media waste. CPG brands spend billions of dollars every year promoting out-of-stock products. Using retail data, you can automate your ads to be on/off based on inventory levels (learn about our out-of-stock solution).
• Using data to predict the future. Fashion and apparel is a cyclical category, thus you can use data from 2019, 2020, and 2021 to identify trends, patterns and, yes, predict the future.
• Differentiate gifters from brand loyalists. During the holidays, it can be common for shoppers to buy from a new brand but make sure to identify the difference between those one-time buyers and those with the potential of becoming brand loyalists.
• Retargeting + personalization. Dynamic retargeting is a great way to re-engage with shoppers, however, no one wants to see the same ad over and over again. Increase conversions by switching up copy and creative to give them more of a personalized/unique experience.
• Polish up your retailer PDPs. Make sure your PDPs are fully optimized ahead of the holidays to make the most out of your media dollars.
• Slowly ease into retail media networks. Yes, retail media networks can yield great results but they also tend to deliver lower ROAS so make sure to test things early or use learnings from other channels before making the investment.
• Segment your audiences! Holiday customers are different from the rest of the year so segmenting audiences is crucial. Bonus tip: you can use Google and Meta’s audience builders to segment and target holiday shoppers.
• The data revolution. The food/bev industry didn’t have access to consumer data, everything used to happen in-store (which is harder to track). Amazon was the first commerce platform to collect rich consumer insight that could be used by this vertical to educate media and strategic decisions.
• Understanding shoppers. Increasingly food/bev brands will need to understand who is buying from them (from a demographic standpoint) and more importantly how they can reach more shoppers like them. This is where retail media networks come in.
• Year-over-year shopping trends have shifted. During the pandemic, a discretionary income went toward making homes more comfortable, now people want to travel and invest in experiences.
• DTC vs Retail benchmarking. Predicting DTC revenue is going to be nearly impossible based on the last two years because so much has changed in the way people shop. However, many consumers who shopped in-store pre-pandemic have returned which makes retail revenue more easy to predict based on pre-pandemic levels.
• Research online, buy in-store. It shouldn’t come as a surprise that >80% of shoppers plan to use digital to research electronics gifts this holiday season, but online research doesn’t always translate into retail sales. Our product Hyphen, is a shoppable landing page that reaches online shoppers and seamlessly converts them on retailers’ website (learn more here).
Inventory + Fulfillment
Supply chain issues are top of mind for almost every business this holiday season, but there are ways to prepare for it. Knowing where to be adaptable and how to manage promotions alongside unknown logistics will be crucial.
• Make a plan and be ready to change it. CPG brands have to be adaptable, there are too many variables involved in this vertical not to be flexible. Both retail and DTC are changing rapidly, brands that can leverage those opportunities will grow market shares one way or another.
• What’s your craziest idea to acquire customers? Customer acquisition for CPG brands can be extremely hard. Brand loyalty runs deep and it can be difficult for new entrants to stand out. Watch our on-demand recording to see how a coffee-based company flipped the script (timestamp: 34:13).
• Convenience is paramount. Buying needs to be easy, products like Hyphen allow online shoppers to buy from their preferred retailers and will find the closest store to them using geolocation. Learn more about Hyphen here.
• Inventory availability is driving promotional strategies. If you have an excess inventory to get rid of, discounts are a great way to do it. If your strategy relies on scarcity, make sure your customers know when products will be back in stock.
• When it comes to fulfillment, speed trumps everything else. Amazon set a trend with same day delivery that is very hard to compete with, especially during the holidays.
• Simplify to amplify your commerce strategy. Reduce the amount of SKU in order to focus on best selling items.
• Get your products in store as early as possible. Plan extra staffing and control over your inventory and shipping as much as possible. DVS (direct vendor ship) can be a great option for better control over inventory.
• Defend your space, not your SKU count. Focus your time and money on your best seller products – what’s driving 80-90% of your revenue and make sure to have the inventory on-hand.
• Keep a close eye on performance. Double down on what’s working and divest on what isn’t.
• Provide additional value with branded samples. If shoppers are spending a lot of money on your brand, offering branded samples can be a way to make your customers feel special and act as an additional gift from the brand to the shopper.
• Supply chain reliability is crucial. Emerging brands need to get underneath their total allotted capacity. Ask yourself: ”At a peak what is the most I can produce?” and build your go-to-market strategy from here– not the other way around. The last thing you want to do is over promise and under deliver.
• Small brands have little control over inventory issues. Be as transparent as you can with your retail partners and work with your agency partner to navigate those conversations.
• Focus promotions on best seller products. This is not the time to be spending money on storage for products that won’t sell. Hone-in on products that will get off the shelves.
A Potential Recession
A potential recession may look very differently for different verticals. Our experts’ concede that it’s unclear if we will ultimately enter into a recession, and projections still show that many consumers intend to spend more this holiday season. It will be important for brands to be mindful of where their customers are at in life, and to be flexible to changes due to economic concerns.
• Differentiate your brand. Inflation hasn’t stopped consumers from spending (so far), in fact spending is up 18% from last year. However, consumers are favoring lower cost options, like Private labels, so it’s important to hone in on your value proposition in your messaging.
• Purpose-driven shopping. While some shoppers favor discounts and savings, others place more emphasis on, fewer, but more meaningful purchases. Either way, this is an opportunity for brands to connect with shoppers about what they care about.
• Don’t forget shoppers after they buy. It’s important to make sure shoppers don’t experience buyers’ remorse, especially following BFCM. Use post-purchase flows and owned channels to validate shopper’s decisions and keep an open line of communication.
• Younger generations have not experienced the last recession and it hasn’t yet impacted the job market so it’s possible the fear of a recession alone won’t take a toll on consumer spending.
• Control what you can. As a brand, all you can do is control the experience you offer your customers. That means focusing on delivering an immersive, positive experience from online engagement to fulfillment.
• Craft a messaging that will resonate with consumers based on how they are feeling right now. Last year, and during the pandemic, that feeling was “togetherness” and being with family and friends. This year it will be different. Find a link between current consumer needs and your brand’s purpose to create your messaging for this year.
• Recession talks are impacting consumer behavior but there is a twist! Upper classes are planning to increase spending this holiday season and for lower classes, who might be trying to save up, there are opportunities for at-home beauty treatments, manicure/pedicure kits, etc.
• Don’t reinvent the wheel. When it comes to messaging, stay true to your brand and what has been working during the year. Don’t try new messaging just for the holidays, stick to what’s working.
• Benefits > Discounts. Although discounts are important, make sure to lead with the benefits of your product/brand first and savings second. Everyone will be offering discounts, but it’s the combination of value + discount that will help you be successful during the holidays.
• A lot of brands are preparing early for a potential recession. Everything rests on customers’ mindset and perceptions so it’s important to make them feel comfortable and always lead with the benefits/value you are offering them.
• Consumption of food/bev has increased. With more people staying at home, there is an opportunity for retail food/bev brands to grow market shares. We saw this with the coffee industry during COVID, less people were going to coffee shops but coffee consumption remained stable because consumers were buying supplies and materials to make coffee at home instead.
• Perception of inflation is the biggest worry right now. 80% of Americans are concerned about inflation and a potential recession but although consumers might be cautious they haven’t pulled back on spending yet.
• Consumers will take advantage of promotional offers. Because of the uncertainty and fear of rising costs, consumers are more likely to take advantage of discounts right away.
• Consumer electronics will grow this holiday season. 33-35% are intending to increase consumer electronics spending on themselves this holiday season.