It's starting to become a broken record: Consumers are feeling pressure from higher food and fuel prices, from the housing market meltdown and the financial industry upheaval, and from credit crunches and approaching holiday stress.
SNEWS knows the current economic state is important for your business. This is one look at different ways it's affecting our industries and your business in a periodic and ongoing series of stories in SNEWS. This time around we take a look at surveys, research about retail and tips offered by experts. Stay tuned for more in-depth reporting on the current situation as it develops and changes, from interviews with experts, closer looks at small businesses and how they are coping, to economic statistics, breaking news and how it affects consumers.
Consumers hunker down
Brand Keys says it expects to see sales decline by some 5 percent for the upcoming holiday season. Based on a survey of 16,000 consumers across all nine census regions, the New York-based brand and customer loyalty research consultancy finds that 35 percent say they plan to spend less on this year's shopping -- shelling out an average of about $775.
That estimate is decidedly more downbeat than projections recently released by the National Retail Federation, which is predicting a small increase of 1.9 percent, with shoppers spending an average of $832.36 on holiday-related shopping. The International Council of Shopping Centers just released its forecast, calling for a gain of 1.7 percent. And last week, NPD Group predicted flat-to-declining sales.
In short, cash-strapped consumers are hunkering down for the holidays. They won't totally walk away from spending, but will be more cautious, the experts seem to agree. They'll also be turning away from their credit cards and paying with cash.
A survey conducted last month by Javelin Strategy & Research showed 39 percent of consumers decreased their credit card usage, up from 37 percent in April.
What's more, industry watchers point out that a growing preference for cash poses a more direct challenge to brick-and-mortar retailers who are struggling to lift sagging sales, as well as online retailers since computers don't accept cash.
"With credit cards, consumers spend 30 percent more (on purchases) than with cash," said Howard Dvorkin, a financial expert on consumer credit and the founder of Consolidated Credit Counseling Services, in a CNN Money.com article.
And, if they're paying cash that means they'll be more selective in what they're buying and probably buy fewer items.
Also this year, consumers are expected to shop sooner, because there are five fewer shopping days between Thanksgiving and Christmas. Brand Keys reported that almost two-thirds of the consumers in its survey (60 percent) say they have already started shopping, looking for bargain gifts well before the traditional Thanksgiving kickoff period.
10 tips to maximize holiday sales
In its countdown to the holidays, SmartReply, a retail marketing firm, offered 10 strategies to implement to maximize sales. The tips are designed to improve retailers' knowledge of their customers' media habits to create integrated marketing campaigns that speak their language.
1. Prep your program and build your database. As you prepare to launch a holiday campaign, start cleansing your data, reactivating inactive customers and soliciting opt-ins. Be sure that your customer data is up to date, error free and complete.
2. Speak your customers' language. Get a handle on how your customers use new media (i.e., email, mobile device, TV, etc.), which channels they interact with daily, how and when they use them. Keep your brand theme consistent across all channels, and customize the message to match the channel's capabilities to ensure relevance and increase customer's convenience. Keep registration or opt-in easy, requiring only one or two clicks to reach the designated page.
3. Create an integrated marketing campaign. Design a marketing campaign that engages customers through the channels of their choice at times when it is most relevant for them. Send emails during what your data shows are peak times when they open their messages. Understand your customers' attitudes, lifestyles and behaviors, and maximize their needs in your message and in the channels you use.
4. Permission granted, don't wait. When a customer opts in to receive communications from you, don't wait. Set up business rules to generate an immediate or near immediate response through the same channel they opted in to. Engage them more readily by using a soft introduction rather than a hard sale. For example, thank them for opting in, remind them what they opted in for, and then summarize in a couple sentences the great merchandise they can buy in your store or on your website.
5. Engage them. Today's customer likes to be engaged and involved. They want to feel that they are an important part of the relationship and the product choices they make.
6. Help them manage their lives. Customers want to interact with brands that help organize their lives. Offer to remind them about your sales. Let them know when you receive a new shipment of their favorite merchandise or brand and give them advance notice before the public is informed. Alert them when a coupon is about to expire and ask if they'd like an extended deadline.
7. Customize, localize, revitalize. To avoid media fragmentation, make your message stand out enough to capture your customers' undivided attention. Use everything at your disposal to create ultimate relevance -- media channel, geography, demographics, behavior, even local, regional or national news headlines. Target your customers' emotional hot buttons; aim to solve a problem they're struggling with; or fulfill a need.
8. Encourage them to share. Encourage and incentivize your customers to share your message and promotion with their friends and family. Coupons, surveys, blogs, games, even photos of the hottest products -- if it's important to them, they'll share it. It costs you nothing and you have everything to gain.
9. Come full circle. Customers active via multiple channels result in longer brand engagement, deeper interaction, higher spending and higher customer lifetime value. For instance, encourage customers to sign up for email alerts on your website. Hang a sign in your storefront window or at the cash/wrap counter displaying an offer message with your web URL and a text opt-in short code. The deeper the relationship, the more likely your customers will be engaged for the long haul.
10. Keep it going. Even when the holidays are over, the valuable relationships you have with your customers needs to be nurtured to keep going. Since your brand is fresh in their mind, continue to keep them engaged. Search your campaign results for nuggets of information you can continue to act on. Once you have a good understanding of your customers' holiday behavior, take the next step and continue to build your relationships all year long.
Tapping into localized prices and promotions
Retail Systems Research (RSR) has found that localized prices are heavily dependent on a clear understanding of local demand and the customer segmentations that support that local demand, but retailers have had difficulty obtaining the information. In an age of Internet transparency and cross-channel shopping, RSR also noted, managing customer expectations across different localities and channels for prices and promotions is extremely challenging.
RSR is currently gathering data for its study, "Going Local: Emerging Best Practices in Localized Pricing and Promotions, Benchmark 2009" to identify the challenges and opportunities that retailers see around localized pricing, and the steps they are taking to address both. To participate in the survey, click here.
The results will be published in late January, and presented at the National Retail Federation's 98th Annual Convention & Expo, Jan 11-14, 2009, in New York.
SNEWS knows the current economic state is important for your business. We will take a look at different ways it's affecting our industries and your business in a periodic and ongoing series of stories. Stay tuned for more in-depth reporting on the current situation. Email us at firstname.lastname@example.org with any tips, comments or ideas on stories you'd like to see.