While the last few years have taught us it’s hard to predict what’s around the corner, certain trends are revealing themselves to be important for Retailers in Q4. Let’s take a look at the Little Rock Digital view on Peak Trading – what it will look like, and how Retailers should react:
Cost of Living Crisis
The unavoidable truth this year is that consumers will have a smaller share of wallet to spare at Christmas than they’ve had in a generation – inflation rates are climbing, the Russian invasion of Ukraine has crippled supply chains, raw material and fuel costs are skyrocketing, energy prices are punitive, we are in a housing crisis – the list goes on.
This crisis will impact consumers in a number of ways, the first being their ability to actually make the shopping trip. Industry data shows that increased fuel costs will lead to a decrease in short distance driving & make online shopping more attractive. This is good for ecommerce of course. However, purchases will be more considered and often smaller value than 2021. Online shoppers are creating smaller baskets and the ‘nice to have’ purchases are being deprioritized.
Ocado in the UK reports that its customers are purchasing ‘fewer groceries online… average basket value for H1 2022 was £120, down 13% from £138 in H1 2021, driven by customers adding fewer items to their baskets.’
Secondly, as consumers become more conscious of their total budget, they will also become more price conscious at unit level. Promotions and offers will be key to winning these customers.
Irish consumers will still engage with Black Friday / Cyber Monday, as with previous years, but the trend will be toward starting earlier, looking for promos, and shopping around for the best deals. (35% of shoppers have looked for discount codes and 29% have increased their use of comparison sites this year (source: Digital River)
For many Retailers, the traditional Q4 experience is likely to be different this year as ancillary categories like gifting and branded beauty might struggle. Research shows that gifting categories will shrink this year as ‘51% of consumers plan to purchase fewer holiday gifts overall’ (source: salesforce) and that ‘Half of all shoppers will switch brands this holiday due to pricing’.
eCommerce Retailers will need to react to this reality by ensuring they have a full calendar of exciting promos and brand deals, that these start early and that where possible, buy now pay later can be facilitated online.
Marketing Landscape
Q4 is the most crowded time of the year for marketing, as the mega-Retailers with substantial budgets soak up all the oxygen in the public consciousness. Think wholesome, family-themed ad campaigns designed to tug at the heart strings, executed across every form of media, from TV ads to paid social ads to ecommerce experiences, to the resurgent audio ads category.
This not only makes it difficult for smaller retailers to achieve cut through with their messaging, but it puts pressure on every kind of resource – the budgets need to be bigger, and the digital skills to execute these campaigns are harder to come by, as agencies and freelancers are all busy with bigger clients. Many of you will be acutely familiar with this if you have recently tried to hire for an in-house digital person recently!
The best advice I can give here is that in a crowded landscape, Retailers should focus, focus, focus. Create an eCommerce & Digital Marketing plan for the key trading weeks and stick to it. Concentrate your efforts and your budgets into channels that you know work – Google Shopping, Retargeting Social Ads, Email Marketing. Now is not the time to burn time and energy testing a new TikTok video. Keep that for Q1. Look at your Google Analytics and see what marketing channels are working for you, and double down. There will be lots of opportunities to spend time and money – influencers, new social platforms, brand promos etc, so Retailers need to focus and not spread the resources too thinly
User Experience is king
This concept has always been central to good eCommerce, but now more than ever, there is an absolute necessity to give the Customer a good experience across all of your brand touchpoints – from digital marketing, to ecommerce, to customer care, to order fulfilment.
There are a couple of reason for this – the first being that consumers are becoming much more savvy. They know the standard they expect from Retailers, and won’t accept anything less.
The second is that the technology around our digital marketing efforts is now much more centred on valuable, relevant content than ever before. In SEO terms, with the Google Helpful Content Update, it’s no longer enough to churn out a search engine-friendly article or site content, the content needs to be readable and useful to a real human eye. In their own words, ‘Google Search is always working to better connect people to helpful information. To this end, we’re launching what we’re calling the “helpful content update” that’s part of a broader effort to ensure people see more original, helpful content written by people, for people, in search results. (Google Helpful Content Update)’
Additionally, social media raison d’être (apparently…) is to serve content that is engaging, relevant and interesting to the individual, based on what their very algorithm understands to be the case – so again, your content needs to be focused on the customer, understanding their needs, and providing real value.
Influencers
Industry data shows that influencer marketing is here to stay, and having recovered from the COVID downturn, is now stronger and more mainstream than ever. The channel does have its merits and we know that ‘Influencer campaigns inherently provide context and relevance since the influencer is endorsing the product’ (Forbes). However, this is a largely unregulated, under-matured marketing channel where the pricing and rules of engagement are set and controlled by the influencers & influencer agencies, often with little correlation to the wider digital marketing industry, so SMEs should approach with caution.
For some categories, eg. Fashion/ Beauty/wellness, Influencer Marketing is a huge opportunity and can be very effective. My rule of thumb for doing this well is, 1. Influencer Marketing is brand awareness marketing – this is important work, but should not be undertaken at the expense of performance marketing. For example, only start looking at this when you are confident you’ve got your Paid Search, Paid Social and Email Marketing all up and running. 2. Do you have the budget? Don’t underserve other marketing channels to facilitate an inflated Influencer fee – this should be an incremental spend and you should measure the effectiveness as best you can. 3. Lastly – know your customer. Look at your online customer data in Google Analytics and social media and figure out their age profile, interests and crucially, the categories they shop, and choose your influencer accordingly.
The Customer
Gen Z have supplanted ‘Millennials’ as the new kid on the block in spending power terms, and brands all over the world are trying to find the way in to this lucrative market. Born between 1995 – 2010, this cohort are starting to come in to the workforce and research shows they will be spending their cash in wildly different ways to the generations before. Where Millennials (born 1980 – 1994) were seen as the ‘me’ generation, coming of age in the ‘good times’, Gen Z came along in a post 9-11, post economic downturn age, with the result that they are more likely to make conscious decisions about the values and ethics of the brands and retailers they engage with. They’re mindful of climate change, interested in a circular fashion economy and care deeply about authenticity from brands. Having said that, they’re also a mobile first consumer whose whole internet is literally in the palm of their hand, so speed, convenience, mobile payments, social commerce, will all be key. These guys will definitely be a force for the future, and Retailers will need to consider how they meet this need, from an ecommerce and digital marketing perspective.
This article first appeared on LinkedIn here. Follow Little Rock Digital on LinkedIn here
