Retail’s holiday “game of chicken”

By most accounts the holiday shopping season got off to a solid start with strong late November sales and a record Cyber Monday.  Though given the historically high level of discounting and rampant free shipping it was likely “profitless prosperity.” But why worry about little details such as actually making money.

So now, with only 18 days of shopping left before Christmas, the real fun begins. And so does the game of chicken between consumers and retailers.

Despite feeling a bit more optimistic, all but the wealthiest consumers are facing a pretty uninspiring economic outlook.  And study after study shows that consumers are still engaged primarily in “surgical shopping”–emphasizing needs over wants and remaining keenly focused on getting a great deal. Retailers, by turn, are hoping to not only drive strong same store sales, but improve their gross margin performance. And here we have our stand-off.

The reality for most consumers is that they are unwilling to pull the trigger unless they see obvious value.  The reality for retailers is they are unlikely to cede market share or risk getting stuck with large markdowns.

So let the game of chicken begin.  My bet is that the retailers blink first.

 

Author: stevenpdennis

Steven Dennis is a trusted advisor and thought-leader on customer-centric strategic growth and innovation. As President of SageBerry Consulting, he applies his C-level executive experience to drive growth and marketing strategy for multi-channel retail, e-commerce and luxury industry clients. He shares his ideas and wisdom regularly in the press, as an industry speaker and through his popular blog "Zen and the Art & Science of Customer-Centricity"(https://stevenpdennis.wordpress.com/). Prior to founding SageBerry, Steven was Senior Vice President of Strategy, Business Development and Marketing for the Neiman Marcus Group. As a member of the Executive Committee he drove the company's major growth initiatives, multi-channel marketing programs and customer insight agenda. Before joining Neiman Marcus, Steven held leadership positions with Sears, including Acting Chief Strategy Officer, Lands' End acquisition integration team leader, Vice President-Multichannel Integration and General Manager-Commercial Sales. Earlier in his career he was with NutraSweet and the global management strategy consulting firm, Booz & Co. Steven received his MBA from the Harvard Business School and a BA from Tufts University. In addition to his consulting work, Steven is an executive-in-residence at the JC Penney Center for Retail Excellence at SMU’s Cox School of Business, President of the DFW Retail Executives Association and serves on the Advisory Boards of Invodo Inc. and Nectar Online Media. He is also active in the social innovation and education reform arena as a Partner and member of the Board of Directors of Dallas Social Venture Partners. He is currently co-leader of DSVP's investment and engagement with SMU's Center on Communities and Education "School Zone" initiative in West Dallas.

1 thought on “Retail’s holiday “game of chicken””

  1. “Right Fit” is the key to success these Holidays. there’s real money to be made if you can figure it out. “Right Fit” varies by shopper according to what their passions are. It’s bigger than needs and wants. Shoppers are asking more questions of themselves, retailers, and brands, before they make the purchase decision. It has to be the right fit or they will pass it by regardless of whether it’s on sale or not.

    How we treat them and their decision process needs to be carefully thought through in terms of what they need from us and when, in order to purchase the right brand/product. We should be offering Right Fit answers and solutions, not just the one size fits all lowering of prices.

    As a tactic using QRC’s to link to comparison data and real time value offers – maybe a bundle if the purchase happens now – has to be a powerful tool for retailers and brands in making sure the purchase happens “right here and now” rather than somewhere else and later.

    My bet is that some brands and retailers have this in place already – and maybe for them the shopper blinks first…

    Like

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