5 Ways Merchants Can Survive The Toughest
Peak Ever

Forget jingle bells – this Christmas is looking set to be the season of ‘silent tills’ as cash-strapped shoppers resist the urge to splurge while the cost of living crisis bites.

Recent research by Brightpearl showed almost seven in 10 US (68%) and half of UK shoppers (49%) are worried about affording the holidays and will be halting their purchases sooner than ever this season, saving what little income they have for essential food, energy and healthcare expenses.

As we teeter into an economic downturn expected to last years, around a quarter of Brits plan to spend less, while a staggering 52% of Americans admit they can’t afford Christmas expenses at all this year.

With consumer spending certain to be lower than usual, retail businesses need to focus on protecting cash flow, seizing opportunities for growth and do everything possible to be operationally streamlined.

Wondering what that means in practice? Here are five things you can do to survive what’s being described by some retail experts as the ‘toughest peak ever’…

1. Go above and beyond to retain existing customers

Did you know the chance of selling to an existing customer is 60-70%, but the chance of selling to a new prospect is just 5-20%? In fact, for most industries, the average customer retention rate is below 20%.

The reality is that customer retention is intrinsically linked to what happens after a customer hits the ‘buy’ button. If their experience is good – including prompt dispatch, good comms, fast delivery – retention is good. If their experience is bad – including errors, delays or lack of comms – retention drops off dramatically. In fact 77% of 1-star reviews on Trustpilot are a direct result of a poor post-purchase experience.

One of the best ways to ensure customers come back is to have reliable stock levels of the right seasonal items. More than a third (35%) of US consumers felt annoyed by a lack of stock last Christmas, but planning your inventory (and, crucially, factoring in seasonal demand) is a proven way to eliminate stockouts, avoid causing disappointment and boost your retention rate.

2. Be smarter about your marketing

CAC (or customer acquisition costs) have soared by a staggering 222% in recent years – from $9 in 2013 to $29 today. As well as hitting the already constrained budgets of retailers this festive season, it also adds huge pressure to ensure that every penny of marketing budget is spent wisely.

In this climate, a scattergun approach is not an option. Instead, you should turn to retail analytics. The latest marketing software can help you diversify your ad spend, be present on the right channels and stay one step ahead of the new trends to ensure your marketing activity is profitable.

As digital campaigning becomes increasingly expensive, having access to the KPIs that matter – and the functionality to combine data to meet your needs – is a smart investment that will pay off.

4. Ensure your business is operationally sound

Our research shows that many retailers are so worried about operational chaos that they’re planning to employ tactics to actively reduce demand this holiday season, such as extending delivery timescales, putting up prices or eliminating promotions and discounts.

But retailers shouldn’t – and don’t – have to sacrifice opportunities for growth during what should be their most important sales season.

Having robust operations – paired with the ability to automate daily tasks like automating sales orders, stock updates and distribution decisions, so items can get out of the door quickly, means brands can process orders quickly and accurately (no delays or mistakes) and handle any sudden spikes in demand with ease.

A robust retail operating system is also a way for brands to limit costly returns and avoid complaints (which all helps boost that all-important customer retention rate).

5. Use intelligent inventory planning

Still using spreadsheets to manually plan your inventory? You’re missing a trick.

Spreadsheets are OK as a stop-gap solution for small businesses, but decision-makers at SMBs and bigger merchants need to identify buying patterns, uncover unusual sales trends and target slow-moving and most popular items using granular metrics such as location, size and style – which is almost impossible to do manually.

Merchants must learn from the downfall of British furniture brand (who recently entered administration after getting ‘caught with massive inventory at just the wrong time’) – and inventory planning technology is key.

Being able to identify your hottest items (to keep them in stock) and know exactly which are your dud items (so you can put them on sale) is a vital growth tactic – and one that could spell the difference between surviving and thriving this holiday season.

6. Add extra sales channels

To ascend the toughest peak ever, merchants need to be willing to try different approaches – and that should include adding new and even ‘alternative’ sales channels, such as TikTok, Instagram or livestream selling, into the mix.

Multi-channel makes your products accessible to potential customers across a variety of sales touchpoints, which means more sales. It’s also an opportunity to de-risk the business. With consumer spending likely to be down this holiday season, selling to them from one place is a huge gamble.

Despite it being such a surefire success, research from Brightpearl shows just 14% of retailers in the UK,and a quarter of US firms, plan on adding new channels this year – many put off by the operational complexity it can bring.

However, with the right operating system in place it can be easy to Plug & Play apps, including new sales channels such as Amazon, eBay and social media. Armed with the technological means to extend to these new channels quickly and efficiently, retailers can enjoy the freedom to scale and drive growth over the festive period and beyond.

See how Inventory Planner can help you succeed this peak season with a free Dedicated Demo.