The Biggest Game in Shopping Has Kicked Off. What's Your Game Plan?

By Keith Mercier - Associate Partner, IBM Retail Center of Competence

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At this time of year, thoughts of family gatherings, egg nog and football are common themes. And although the playoffs haven’t even begun, there is one big game that’s already started. It’s the annual contest that began Thanksgiving Day and lasts through the new year. It is the Super Bowl of Shopping, and this year is looking like it is going to be an extraordinary contest.

The reason: There are fewer days between Thanksgiving and Christmas than any other holiday season in recent years. And that puts added pressure on both consumers and retailers. For consumers, there are fewer days to get their holiday shopping done. For the retailers, they have fewer days to make their sales.

According to IBM Benchmark results, consumers went on the offensive and struck early by grabbing online deals during Black Friday and Cyber Monday at a historic rate. But the games have just begun.  Some consumers went on the defensive to wait until later in the season to shop. Will this cause retailers to make even deeper promotions than planned in order to move the units and get the sales they need?

Or will the retailers call a defensive play of their own with shallower discounts based on buying less inventory? Perhaps they will go on a strong offense, with deep online discounts early and often to create a consumer shopping frenzy?

To get a better understanding of how this contest will play out over the remaining weeks of holiday buying, let’s take a closer look at the matchup.

Bargain Shoppers
Since The Great Recession, retailers have lost some of their dominance in the game because of their heavy reliance on discounting to drive traffic. Consumers learned that waiting can be a very effective strategy to get a better price and have used this defensive move for the past several years. And there’s no reason to think they won’t use it again.  For example, on Cyber Monday, sales were up 21 percent, but average order value was down 1 percent, according to IBM Benchmark reports.
Advantage: Consumers

Connected Consumer
Savvy consumers have joined retailers’ loyalty programs to earn points for every dollar they spend. They’ve signed up for emails and texts to ensure they are in the know on any possible savings opportunity. With email, they learn in advance what deals are available online and in-store so they can better plan their shopping trips. And with consumers’ heavy reliance on their mobile smart phones, they can literally be alerted of online sales in real-time via text. More than ever, consumers have an arsenal of technology they can use to find out who has the best deals and when.
Advantage: Consumers

Big Data Game Plan
Consumers have become increasingly open to sharing data on their habits, purchasing history, and online preferences in exchange for more personalized offers and recommendations. This Big Data game plan for understanding customers is helping retailers drive more profitable business by not having to discount too deeply to everyone, but rather target specific customers with specific offers that are relevant to them. Big Data is the secret weapon that the savviest retailers will use. And with such a condensed holiday shopping season, it might be both the greatest offensive and defensive weapon they have.
Advantage: Retailers

The Gift of Omnichannel
Retailers have been putting an omnichannel strategy at the top of their Christmas lists for a few years now, but many have found it challenging to knit information from various sales channels together to form a consolidated view of a customer. This year, we’ll see many retailers mastering omnichannel thanks to their use of cloud computing. According to the IBM Center for Applied Insights, 31 percent of retailers have deployed cloud computing and 16 percent have a cloud pilot in place. Cloud is allowing retailers to bring various sales channels together as a single, secure platform to get a complete picture of consumers’ wants and needs.
Advantage: Retailers

So who will win this year’s shopping Super Bowl? There may not be many tie games in football, but I think both retailers and consumers will come out winners this holiday season. The latter are getting more deals together with increased personalization and convenience while retailers are able to drive greater profits and reach customers more easily. It’s a win win.

 

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