Monday, November 16

Projecting Sales: Retailers Look To Black Friday


If consumer confidence is any indication of what retailers might anticipate this year, beginning with Black Friday, then the best they can hope for is: the fear of a worsening economy may have had a greater impact last year than living in one will have this year.

Most forecasts suggest a small gain in retail sales over last year. And most consider the smallest gain good news, despite consumer confidence indicators there is some validity to the concept that they will be more cautious.

Consumer Confidence Highlights From comScore

• About 75 percent of consumers across all income levels are more afraid of the economic future than ever before.
• 46 percent of over $100k households/65 percent of under $50k households are spending less on non-essentials.
• 42 percent of all consumers across all income levels are overwhelmingly concerned about unemployment/job security.
• Fear of unemployment/job security increased in October all among 100k households and under 450k households.
• 56 percent of all consumers think that unemployment will not begin to improve in 2010.
• 32 percent of all consumers across all income levels are concerned about rising prices, with 100k households also concerned about the devaluation of real estate and financial assets.

Five Tips For Retailers Attempting To Leverage Online Shopping

• Retailers hoping to drive incremental sales in physical retail locations need to develop reasons for consumers to add their store to their shopping route. Sales are not enough; consumers are shopping for an experience as much as they are bargains. For example, a book store that already has an online component can win with physical events like key book signings.

• Retailers that are already advertising across multiple channels this holiday season (digital and traditional) need to align their advertising messages so that one tactic naturally leads into the next. For example, digital advertising might include in-store discounts or promotions and in-store sales might drive return visits online, with a clear indication of why it adds value.

• Retailers mostly know which digital marketing tactics (search, display, email, etc.) are driving traffic to their sites, but most are struggling to convert visitation into sales. There tends to be an over-reliance on general conversation with little call to specific action. Unlike physical stores where customer service agents can answer questions and direct sales, online stores rely almost exclusively on a browse-and-buy shopper. Retailers with a mechanism to engage customers online tend to have more success with demand fulfillment.

• Retailers seem to think they are able to find their demographic online and distinguish which will visit a site, but they are struggling to determine where category buyers are online within that demographic. While it would be challenging to initiate consumer engagement online one week out from the start of holiday shopping, social media programs that engage consumers could readily provide retail outlets with a better understanding of browsers vs. advocates vs. buyers.

• Search spend investments during the holidays is difficult to validate because the reality is that search spend investments are almost a defensive marketing tactic. During non-holiday seasons, it is easier to validate. During a holiday season, it succeeds mostly at protecting against competitors in the pursuit of diverting would-be customers.

Overall, all of the most common questions being posed by retailers pinpoint the real challenge this season. In general, they are all succeeding in increasing site visitation, but most are not converting those visits into sales. Simply put, there are more people buying online but those people are spending less and making fewer transactions and fewer dollars per transaction.

It is not a surprise, as the majority of online marketers seem better quipped to entertain consumers online than selling products or driving physical traffic. So how do you change behavior when the U.S. jobless rate has climbed to 10.2 percent (and the boarder measure has risen to 17.2 percent)?

With 55 percent of consumers saying that they have less money this year than previous years, it is critical for retailers to provide engaging incentives to buyers. According to the comScore report, the most common ideas are to offer free shipping, provide layaway options, and increasing their use of social media. However, where retailers may falter is in how they employ social media — blasting holiday discounts across Facebook and Twitter are unlikely to differentiate their stores.

Any successful social media model will likely be those that engage consumers much like in-store personnel might, directing consumers to their self-defined interests. Isn't that what we always knew about advertising? It works to get people in the door, but someone or something else has to close a sale that delivers value to the lives of the consumer.

2 comments:

Anonymous said...

It is certainly interesting for me to read this post. Thanks for it. I like such themes and everything connected to them. I definitely want to read more soon.

Rich on 11/17/09, 11:22 AM said...

@Anon

Thank you. Every Monday, we look for some of the best research available in order to help organizations develop better communication programs.

All my best,
Rich

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