Image courtesy of Target
The rollercoaster we’ve all been riding these past few years has been throwing us for loops, but one industry that’s understandably more nauseous than most is retail. While some retailers thrived via their e-commerce and click-and-collect channels, others that relied on experiential-based retail (think movie theatres, amusement parks, and restaurants) struggled to stay afloat, with many shuttering their operations. To those who are still hugging the curves, my word of caution is that it may not be time quite yet to unclench and pat yourself on the back. And here’s why.
Reading the recent headlines, you will come across several cautionary tales about retailers such as Target, Walmart, Macy’s and others with bloated inventories; manufacturers not knowing whether to ramp up or down production; and Covid highflyers like Shopify, Peloton and others now taking a beating in the stock market and downsizing staff. We are also seeing record inflation and high gas prices. The United States Federal Reserve is rumored to be instituting another rate hike, hoping to slow down inflation. These headwinds appear to be harbingers of struggles ahead for the economy as well as retailers. The ‘R’ word, recession, has even been bandied about.
We are dealing with an ever-challenging time. Emerging from the pandemic, some might have thought it was time to exhale and take a deep breath. But the reality of the global political-economic situation quickly reminded us that there is no pause button. This coming holiday season could prove to be one of the most challenging. So, what can retailers and others within the supply chain do?
Focus on demand driving events. We are currently going through the first true in-person back-to-school season in years, echoing pre-pandemic normalcy. Retailers like Target and Walmart prepped their shelves a month ago to meet their parents’ needs to restock their children’s school lockers. Retailers need to flex their creativity muscles. Are there other products that can be bundled? Of course, you need to get your daughter a new backpack, but maybe you also need a new tote bag to help carry her equipment to her soccer practice. New pair of sneakers, get half off a pair for yourself to keep up with your kids. Lean on the data and intelligence you have within your digital assets to find the nuggets of information that might reveal cross-selling opportunities.
Start your Christmas efforts …gasp… sooner. This trend has been happening for many years now. I remember seeing Christmas tree ornaments and inflatable Santa Clauses in Costco in the middle of August. If you are concerned with mountains of inventory and a possible slowdown in consumer spending, give the consumer as much time as she needs to address her holiday shopping list. Be aggressive with your financing as well. With the potential for the Fed to raise rates, offer friendlier interest rates for consumers who are willing to order now, and pay later. Extend the runway for moving your inventory.
Forward position your inventory. Take an aggressive strategy when it comes to embracing micro-fulfillment. Why? Look to make the velocity of inventory flow as streamlined and rapid as possible. Determine what are the possible fast-movers and get them close to your customer. Promote the speed at which you can have these items in your customer’s hands and the ease of fulfillment. Create an environment where your consumers will be able to get their hands on inventory quickly and with as little friction as possible. Make sure your customers are made aware of this option… And don’t be afraid to aggressively message your capability.
Granted, these are not silver bullets for retailers to navigate what might prove to be a very difficult and challenging second half of the year. But rather than taking these next few turns white-knuckled and screaming, lean on your digital assets and take action in anticipation of the ups and downs ahead.