Retailers Need a Personalized, Online Approach to the Holiday Season

Holiday shoppers this year will be price-conscious, budget-minded, and mostly online. They’ll prioritize customer service, fast delivery at reasonable rates, and accommodating return policies. And they’ll start early, with many planning to begin in September, diminishing the impact of Black Friday and Cyber Monday sales.

Those are just some of the findings from a July 2023 survey by Celigo of more than 1,000 U.S. consumers nationwide that asked about people’s plans, preferences and budgets for the holiday season.

Amid fears of a coming recession, consumers expect to be frugal, with nearly 80 percent of survey respondents saying they'll spend less than in previous years. Although there will be some big spenders, nearly half say they expect to spend less than $1,000.

Brick-and-mortar stores will likely see less traffic than in years past, with 75 percent of consumers saying they will do most of their shopping online — and 65 percent saying they will do all of it online. They also plan to be pretty hard-nosed about it, looking to avoid the headaches of pandemic-era shopping by prioritizing pricing, product availability, customer service and fast, reliable deliveries. In short, consumers have high expectations for their shopping experiences, but they won’t be going about it in a traditional way.

Retailers should take heed. A conventional approach to the holiday season likely won’t succeed. Retailers will need to take a more granular, segmented approach and employ a range of tactics to provide tailored, personalized service for each customer segment. This includes the use of automation to provide critical support as an alternative to conventional staffing methods.

Personalized Service is a Priority

Many consumers are planning to shop early, but not very often. Rather than holding out for Black Friday, Cyber Monday, or last-minute deals, 50 percent said they'll start their shopping as early as September, and 58 percent said they plan to spend no more than five hours shopping.

And although consumers are showing a clear preference for the convenience and advantages of e-commerce, they want a personalized experience, exceptional customer service, fast delivery options, and customer-friendly return policies. More than two-thirds (69 percent) said they want more personalized service in addition to traditional deals. And many said they will hold retailers to those standards, with 53 percent saying they'll pass over a retailer that doesn’t meet their delivery needs, and 45 percent saying poor customer service would drive them away.

The effects the pandemic had on holiday shopping over the past few years left a bad taste for many consumers, with 45 percent saying they were most frustrated by increased prices and limited stock for in-demand products. A nearly equal number, 44 percent, were unhappy with the frequency of late deliveries.

Those frustrations have driven a shift toward independent retailers, with 53 percent of survey respondents saying they prefer independent retailers that carry distinctive, readily available, quality products that large chains don’t have.

Retailers Get Operationally Ready to Meet Higher Consumer Expectations

This year, consumers have higher expectations for their holiday shopping experiences, demanding timely delivery, readily available products, and seamless checkout and return policies more than ever before. They're also more price-conscious and keen on finding better deals and personalized offers to get their money’s worth.

To meet these demands, retailers of all sizes must implement e-commerce enterprise automation, integrate customer communications channels, and leverage AI and analytics. Fortunately, it’s not too late for retailers to implement automation strategies that will not only reduce operational costs, but also redirect precious IT resources away from manual processes to supporting critical customer experience initiatives.

5 Strategies for Retail Operations Readiness

Here are the five key strategies that retailers should embrace to achieve ultimate operational readiness in time for holiday 2023:

1. Meet customers where they are.

Retailers need to meet customers where they are to expand reach and sales. They should list products on marketplaces and advertise on search engines and social media platforms. They should also prioritize the channels where their target audiences are most active as well as diversify the strategy to gain competitive advantage. In doing so, they should examine the different demographics and shopping behaviors of each channel and invest accordingly based on potential return on investment.

2. Plan, forecast and manage inventory.

No retailer wants to encounter out-of-stock issues that will drive away potential customers. At the same time, retailers don’t want to be left with excess inventory that doesn't sell. Therefore, they must focus on items that will be in demand and sell them at a steady increased rate. This means that retailers need the data to support the products that will be the best sellers because that's where they need to increase inventory the most. Therefore, they can avoid having a surplus of inventory in those areas.

3. Make returns easy.

Some retailers think that making returns harder will reduce their return rate. That's a big mistake. First, it annoys the shopper who won't convert into a loyal customer if they face an arduous returns process. And if they do convert they're likely to purchase less. Second, it makes more work for customer experience teams who would prefer to focus on selling, fulfilling orders, completing abandoned checkouts, and reaching out to consumers to finish purchases. Retailers must have concise, clear returns policies. In fact, 79 percent of shoppers scrutinize retailers’ return policies before shopping. If they're confused or not confident of a returns policy, chances are they won't complete a purchase.

4. Boost e-commerce operations with automation.

Delays in fulfillment and accurate fulfillment of orders are the biggest problems retailers face each holiday season. Not surprisingly, manual processes are the biggest cause of the top holiday shopping headaches — lack of inventory, poor fulfillment, and weak connection to marketplaces. Retailers can address the root cause of these problems with the right software and tools in fulfillment, third-party logistics, and other automated business processes. Automating these manual business processes will guarantee a far smoother shopping experience.

5. Use analytics and AI to capture critical data insights into shopping behavior.

Analytics and AI generate the right data that provides accurate insights into current and future shopper behavior. In fact, substantive AI drives predictive analytics strategies that gauge which products and shopping trends will be most popular with consumers over time. Those meaningful AI initiatives are based on predictive models which use data at their core. If that data isn't accurate, your AI output won't be accurate and the return on that investment will be compromised. Before embarking on AI initiatives, retailers must automate as many of their business processes as possible because AI will be ineffective without the accurate data generated by those processes. Fortunately, retailers can easily automate those processes by investing in iPaaS (integrated platform-as-a-service) solutions.

If retailers follow these five steps, they will not only have a highly successful holiday 2023, but also put their organizations in a stronger position for 2024, when the economy is expected to improve.

Mark Simon is the vice president of strategy at Celigo, an integration-platform-as-a-service (iPaaS).