Retailers hoping for decent returns from their promotions investment this year will need a much more detailed picture of what’s actually happened as they go into peak, says Robin Coles, Managing Director EMEA at XCCommerce.
Covid and Brexit have taught us all that the word upheaval is a highly subjective term, based as it is on the information available at the time of phrasing. The word was widely used prior to March 2020 to describe a retail market where consumer behaviour had become unpredictable, fickle and often unusual.
As a result, retailers were urged to adopt a more flexible model for promotions management so they could respond to constant change and, in doing so, protect their investment and maintain healthy and profitable communications with their customers.
In late 2021, upheaval does not seem to quite describe what is happening, made worse by the fact that unusual mid pandemic behaviour now looks set to become habitual. Online shopping grew as much in eight weeks as it did in 10 years, according to McKinsey. In addition, it found that grocery ecommerce rose by 17% while sectors that depended on travel declined as the 3-day or less in the office working week looks set to become the norm.
Behind these figures, we can see that consumers shopped more purposefully leaving less time for browsing; shopping journeys became shorter which gave local suppliers a boost; clothing purchases switched from formal to casual; and, promotional behaviour became even harder to direct.
As original research of 2,000 consumers undertaken by XCCommerce during the pandemic shows, greater sensitivity over economic and employment prospects made consumers want lower prices more than ever; 56% said discounts will be the most important factor when considering where to shop.
However, in the same research, 72% of respondents said they want more promotions and 69% would make that the reason they bought from a retailer. 77% wanted coupons and vouchers etc while 62% said they would be loyal to retailers who offer promotions.
This level of upheaval is now the norm and set to get worse in the context of the all-important peak trading season. Politicians and senior industry figures can say don’t panic but this tends to have the opposite effect on consumers and will make their behaviour even harder to call as we get closer to Christmas.
Retailers will therefore need to be able to react much more quickly to these new behaviours. This starts with better insight into how consumers have been accessing promotions over the last 18 months. In our research, 52% of consumers reported accessing offers via mail coupons and offers from retailers and brands. 36% are accessing in-store promoted offers while 28% are using offers received as part of a loyalty programme. For promotions via push notifications from a retailer’s app it was 24%. A fifth (20%) of 18-24-year-old are accessing promotions via SMS and 21% are accessing offers through TV advertising.
This insight though has a sting in the tail, that promotions management has become harder than ever because of the sheer volume of promotions, the channels they are promoted through and the way consumers access them. For instance, in research by Blackhawk Network, 59% of consumers bought a gift card online during lockdowns and other restrictions but as things ease further, 70% continue with purchasing online gift cards and of those, 38% said the reason for this was that they specifically wanted a digital card rather than a physical card. In addition, consumers want immediacy when it comes to using promotions; 67% of consumers said they are interested in instant gifting, enabling them to immediately send a gift card via email or SMS. 70% of consumers said they are likely to purchase a gift card this Christmas and 59% plan to purchase online.
This desire for greater digitisation is useful to retailers because it will enable them to consolidate multiple promotions through a single app or file, which makes it easier for the consumer to access and easier for in-store staff to process. Retailers can be everywhere at once but with messaging and promotional content that is consistent in terms of price and offer. It then becomes easier to broaden the offer, particularly with supply problems that are starting to bite, so retailers can offer other soft benefits such as donating to charity or access to special events.
This is one of the steps to greater simplicity and from there to personalisation so that promotions are designed, communicated and executed based on the known preferences of each customer. This requires a centralised, integrated promotion management capability that can access all available data about customers and execute across all channels, on and offline.
This capability will be the baseline during the run up to Christmas and into the future. While making changes immediately will be hard for most retailers now going into peak, by analysing promotions performance from now until end January, in order to get a picture of the wins and fails, they can create a solution wishlist for 2022.