Retailers, aim high to stand out this holiday season

Articles
October 30, 2009

Retailers, aim high to stand out this holiday season

Since retailers got blown off their perilous tightropes in the recession of 2008-2009, they’ve been trying hard to regain their right balance

Since retailers got blown off their perilous tightropes in the recession of 2008-2009, they’ve been trying hard to regain their right balance – in sales growth, inventory levels, merchandising activities, staff levels, service, and other key elements that could help sustain their consumer appeals.

Crunch time for them is now, as Halloween kicks off the start of the prolonged holiday season that could save their fiscal years, if played correctly. However, consumers’ persistent need to save and clamp down on demand has made it harder for stores to accurately predict sell through rates at prices they can live with.  If 2009 so far is a good indicator, it looks like promotions will start early, and be frequent and deep between now and Christmas.

Toss all those factors into the mix, and we think the next couple of months will be as tricky as a meteorologist’s forecast. Unlike the weatherman, however, supermarkets can ill afford to risk making half their customers unhappy. We urge them to aim for high customer satisfaction levels – because if one thing is true this year, people are fed up with ‘getting less of everything’ this year.

That’s exactly what they’ll be finding on store shelves this year, according to a BDO Seidman study cited by the Boston Globe, which said about 40% of chief financial officers at leading U.S. merchants believe insufficient inventory is the biggest risk to holiday sales. Following last year’s markdowns, particularly in apparel chains, having less on hand and ordering more frequently is how they’ll look to protect margins this holiday period. 

Compared with a year ago, Walmart has cut inventory by about six percent, JCPenney by 14%, and Saks Fifth Avenue by about 20%, the Globe reported.

Yet apparel and hard goods are often more discretionary than food. Food shoppers are less likely to forgive if they can’t fulfill missions for expansive family gatherings, get-togethers with friends, or their core family’s meal needs. Out-of-stocks and close-dated foods aren’t on any of their shopping lists. Nor is attitude from stressed employees (so have enough staff and treat them well) or untidy aisles that are hard to navigate.

Therefore, food retailers that actually make shoppers feel important (and conceal their own operating and financial challenges) could stand out and be rewarded. Think of more in-store events, more sampling, more inventive displays, and more ways to connect with the community. Never mind the dim forecasts reported in the press. Win shoppers back emotionally with the right balance throughout your stores.