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Will retailers rise to the occasion this Christmas?

Retailers are entering their busiest and potentially most profitable period – but it is also their riskiest. Fail to hit the nail on the head, and retailers could struggle to make it through to next Christmas.

House of Fraser, Debenhams and Marks & Spencers are just some of the stores that are facing big challenges in 2018. To ensure brands are to keep afloat during their toughest period, retailers must focus on three critical areas; Generation Z, customer insight, and omni-channel.

All eyes on Generation Z

This Christmas, Generation Z is set to be the most lucrative demographic to target, according to our recent research. In fact, one-third of 18-24 year-olds will spend more this season than last. As such, this segment is becoming an influential customer base and retailers cannot afford to ignore their needs. However, making this difficult for retailers is the fact that Generation Z is one of the hardest audiences to please. For instance, its members don’t feel obliged to shop at a particular retailer and consequently have a lower level of retailer loyalty.

Just one bad experience and a Generation Z customer won’t think twice to turn to a competitor, share their complaint online and influencers others to do the same. This is especially true during times such as Black Friday and Cyber Monday where retailers are competing on price and jeopardising the customer experience. With one quarter of consumers expected to spend less this Christmas compared with last, perfecting the customer experience has never been more critical.

Generation Z might be the biggest spenders but they can also be the most fickle and therefore need to be targeted in a different way to have a great customer experience. In fact, the openness to share and inform others of their experience is one of the key factors that differentiates Generation Z consumers from others.

Recent global research from Accenture states that 70% of Generation Z shoppers have written reviews online and 40% have often given feedback. This can be both a blessing and a burden for retailers, depending on whether the customer has had a good or bad shopping experience.

Customers are immediately reacting to their shopping experience, it is just as important to stop a bad experience from happening, as it is to create a good experience for the customer. Brands must make full use of all channels in order to engage this audience at multiple touch points, maximise sales opportunities and strengthen fragile customer loyalty through providing as personal an experience as possible.

Ignore customer information at your peril

Generation Z is not the only area that brands need to rapidly get up to speed with. For instance, while many retailers might understand the importance of customer insight, utilising this information to strengthen the customer experience is a different matter. Fail to make this distinction and brands are guaranteed to miss out on sales opportunities. Part of the problem is that retailers tend to overlook the technicalities behind transactions and as a result, are losing out on core customer insights.

Using technology such as tokenisation, retailers can look to combine in-store data and online data around individual customers in order to gain a deeper insight on individual shopping habits. These insights are not just critical for shaping the customer experience in the short-term but can help retailers build their entire brand experience, from the moment a customer first engages with them through to the point of return.

For example, more than half of respondents (54%) from our recent research said deals and promotions exclusive to a branch motivated a purchase in store. This highlights the importance of not just personalising the customer experience but building strong customer relations from the first point of engagement. This is often before a customer has stepped inside a store or even looked at a brand’s website. It is therefore important to realise that customers don’t just purchase from a retailer, in fact they are looking to build a rapport with a brand that continues past checkout.

Optimise through omni-channel

Building a rapport with a consumer must also be an omni-channel concern. While Christmas can be the most profitable period for retailers, higher sales can also bring more headaches. If they are not careful, retailers can struggle to keep up with back office operations such as stock count and reconciliation.

Considering 76% of retailers reported that efficient returns policies are the number one measure in decreasing cart abandonment at the checkout, according to our research, it’s critical that brands can execute a strong and consistent customer experience. This means operating an efficient and reliable back office that can manage common issues that arise during Christmas, such as selling out of stock. Having the resources and support to deal with these issues can mark the difference between success and failure during the Christmas period.

For brands to win this Christmas they need to master a fine balancing act between offering a great customer experience and operating an efficient back office. Christmas has traditionally been a prosperous time for retailers, however unless they focus on the changing dynamics of the UK retail environment and evolve their business and operational practices in line with consumer needs and behaviours, many will risk failing to capitalise on the opportunities that this time of year presents.


Angus Burrell, general manager UK of Omni-channel solutions at Valitor

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