How retailers can entice Christmas shoppers despite high inflation
- jetmiramata9
- Dec 22, 2022
- 5 min read
Retailers need to understand the consumer, provide them with relevant promotions, and use strategic pricing.
This year’s holiday season is plagued with low consumer confidence and market uncertainty. It will be a challenge for retailers to provide enough incentive for consumers to want to shop at typical Christmas volumes. This is particularly problematic for business dealing with high levels of inventory. The retailors that come out on top with a successful pricing strategy will have to brave inflation, use selective price increases, and enable targeted promotions.
Brave Inflation
Higher inflation rates create multiple pressures for retailers; pressure from consumers who demand low prices, employees who wants competitive wages, and shareholders who want profitability. However, the primary obstacle is to outperform competitors despite inflation by generating value for consumers.
The aim is to outlast inflation until better market conditions return by developing a strong competitive advantage. When consumers become financially uncertain, and their patterns are disrupted they reduce their brand loyalty in favour of receiving a competitive value offering. This presents hungry firms with the ability to pay attention to the customers shifting needs and attune their offerings to remain relevant. This takes the form of taking consumers away from competitors and keeping customers loyal through “keep and steal” strategies.
Firstly, to keep customers organizations must leverage business intelligence to understand their current customers’ needs as they no longer can justify expenditure on wants.
Additionally, to steal customers companies must catch the attention of churning customers belonging to the competition, enticing them over by listening to why they left and giving them what they need.
Pivotally to brave inflation organizations must ensure that their customers feel valued and that they individually matter to the business, this generates higher levels of loyalty. Additionally, to create a competitive advantage Finsys has identified that consumers need to be offered more value for money. The secret is employing agile pricing strategies including sales, discounts, promotions, etc. Yet, the most important element of a good pricing strategy is to ensure its relevancy and impact on the consumers who receive it.
Selective price increase
Selectively curating pricing can aid consumers in their decision-making processes. Anytime a consumer looks at a price tag they are either price incentive, very price sensitive or quality focused. This means that shoppers can be expected to act within the description that best fits them as defined bellow;
Price Incentive consumers are willing to purchase a good at any price regardless of quality.
Price Sensitive consumers prioritize paying the least possible for their goods, Low Price > Quality.
Quality Focused buyers only care about the quality of a product or service, Quality > Price.
The entire mental debate is about price vs quality, with goods of the highest quality being immune to price comparison as these goods are simply purchased by people that only demand the best.
Yet, Finsys points out some simple ways to price for a desired effect.
- Increasing the selling price on goods that are bought by price insensitive consumers will positively increase margins without changing sales volume.
- Increasing the sales price of a midrange product will make price sensitive consumers look for budget alternatives and quality focused buyers explore higher end options. This will have the impact of clearing more budget and high-end inventory as consumers will feel like they are receiving a better deal at both extremes. Consider, a Christmas tree seller has three trees, small (10), medium (20), and large (30). If the price of the medium tree was raised to 25 dollars, more buyers will be willing to buy the large tree for 5 extra dollars or a smaller tree to save 15 dollars.
- Reducing the sales price of basic goods can help get more people in the door to see promotions and encourage impulse purchases.
- Promoting holiday goods and items can help communicate to consumers that the business they shop at, cares about them enjoying the holiday season. This is valuable as it demonstrates a sense of shared loyalty to the consumer by pricing for the economic climate.
These points showcase how pricing can be used to shift consumer perceptions and move them towards buying good they typically would not consider to aid in the clearing of relevant inventory.
Targeted promotions
Selectively curating retail prices and using strategic promotions retailers can gain the attention of existing and new consumers. The importance is manifesting a sense of holiday joy for shoppers to encourage more spending despite higher costs for the seller and buyer alike. Due to generally increased costs relevant to inflation most business must increase profits by becoming more creative if they wish to benefit the traditional Christmas shopping boom period. One way to achieve this is through targeted promotions, by listening to the consumer retailers can discount what is in demand to get them in the door. Enabling for complimentary sales tactics, promotion of higher margin goods/services, encouraging impose purchases and more. This provides an avenue for hungry business to employ discounts based on what their consumers are telling them.
Consider, discounting popular items, over-stocked goods, and items your competitors are using to draw in more customers. By not engaging in blanket sales and instead selecting what is being discounted, consumer choice is removed, sale predictions become more accurate, and it becomes easier to directly out price chosen competitors.
These target promotions aid in bringing in new people and giving exactly what loyal customers want at a price they like.
How Finsys is building loyalty for the holiday
Finsys helps retailers stand out with three tips to take advantage of the Christmas shopping season.
1. Entice early shoppers with exciting discounts on high inventory items.
Besides helping clear excess inventory early promotions also provide additional benefits. Starting targeted pricing tactics early for the holiday season in November is advantageous for businesses. Namely, these discounts serve to reward early shoppers, make price conscious buyers feel valued and provide time to adjust strategies based on results. Aiding in the ability to get more people excited about a specific retailer sooner with enough time remaining to shift tactics during the ramp up to the holiday season. Retailers can create consumer satisfaction by offering flexible promotions aimed at building loyalty.
2. Engage customers with holiday-centric promotions.
True customer interest in a promotion result in items going from being a curiosity to a becoming a purchase. Taking this to the next level is placing promoted items in locations to create a festive connection with the customer, for example selling Christmas decorations next to candy. The aim of the retailer is to highlight the added value these additional products through showcasing how the items can enhance the buyers holiday experience. Doing this well and in a productive manner creates more loyal Christmas shoppers as they associate the retailer with the holiday.
3. Generate loyalty through personalized promotions.
Despite reduced prices helping bring consumers through the door, good retialers will personalize their promotions to create a memorable and existing experience for their shoppers.
What makes a promotion personal? - It’s when promotions are made to be directly relevant to the most consumers/viewers of a given advertisement at once. This is accomplished using statistics and data about consumers.
Why not tailor ads and promotions to every individual? - Without the use of AI and deep tech to create an ad or promotion for each person based on data marketers are left to make one generic add and pair it is using data with the highest number of relevant people based on data points.
Strong personalized promotions are designed to engage the most consumers by creating ads/promotions that feel personal to the most people. This could include an advent calendar featuring a new daily sale or discounts based on how much a customer has spent. Going beyond this is to ensure a strong understanding of who the shoppers are and what they want, to position the best deal and most notable promotions where they will easily see it. Helping them feel more connected to the store and its promotions as they will be of more interest to the most consumers.
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