From the moment the first Black Friday discount is advertised until the final, unwanted holiday gift is returned, retailers are actively managing the biggest season of the year. While this period can bring a large increase in sales volume, it also causes a unique set of challenges.
This holiday season was particularly difficult as the industry faced rising prices, supply chain disruptions and an ongoing labor shortage. In fact, retail spending dipped .6% in November despite record-breaking sales between Black Friday and Cyber Monday.
With the holidays traditionally setting the tone for the new year, these conflicting statistics paint a muddled picture of the future of retail in 2023. Let’s take a look at how 2022 ended and break down the triumphs and setbacks from this holiday season.
Shining Moments From This Season
Ever since 2020, retailers have been dealing with numerous disruptions. And many retailers have come out on the other side of these challenges stronger and more adaptable than ever before.
One notable area of improvement across the industry has been with multichannel experiences. This holiday season, consumers were once again shopping both online and in-store with 63% of consumers returning to stores as pandemic-related fears lessen. This is great news for retailers with an engaging store format and matching strategic cross-channel partnerships and promotions.
Similarly, retailers that were able to adapt to unique fulfillment methods found success this holiday season. Many consumers shopped early in anticipation of supply chain delays, but for those that didn’t, creative strategies for ensuring on-time delivery were well-received. For example, Best Buy, JCPenney and Target invested in new BOPIS tactics, while other retailers carefully chose supply chain partners that could keep shelves stocked despite fluctuating demand.
Holiday Season Mishaps To Learn From
One of the biggest challenges this year was undoubtedly inflation. Rising prices for food and other necessities forced consumers to cut back on discretionary spending. Fortunately, in November, the inflation rate slowed for the first time since December 2021. But this doesn’t mean that retailers or consumers are out of the hot seat – inflation is still hovering around 7.7% in the United States.
As a result of pricing challenges, retailers and partners will need to prioritize strategic partnerships and promotions in 2023. When taking on a new partner within their supply chain, they must be extra vigilant in the contract negotiation phase. In doing so, they can ensure prices won’t rise in case of changes in demand or product availability. Similarly, retailers and CPG companies should prepare agreements that allow for promotions that help offset financial uncertainty.
Important Takeaways for 2023
One overarching takeaway from the 2022 holiday season is the need for transparency and data-driven insights. Retailers should strive to always know which promotions customers are responding well to, which partners are the most valuable and where possible supply chain shortcomings are. Then, these retailers can adapt their strategy in a way that minimizes breaks in the customer experiences and improves margins.
This is done by using platforms like gicom that allow for increased partner transparency and collaboration. In fact, when determining a new partner or calculating new promotions, retailers can rely on gicom’s Real-Time Margin calculator to directly see how the new deal would react to changes in supply and demand.
This level of access to the impact of ongoing business decisions and customer reactions will be critical to success in 2023 and beyond.
Navigating 2023 With gicom
2022 was challenging, to say the least, and 2023 is likely going to continue to push retailers to be more adaptable and innovative. But gicom understands that it takes a village to create a successful business. If you’re looking for the right partner and the right technology to help your business maximize profits in 2023, reach out to us today
And, if you’re attending NRF 2023, we’d love to meet you! Click here to schedule an in-person meeting at NRF in NYC on Jan. 15-17.