With the Back-to-School season essentially behind us, attention is shifting to Black Friday, Cyber Monday, and Holiday 2011. Fundamentals like free shipping and site up-time will continue to be key. But what will retailers do differently this year to win the season? Here are 9 strategies we’ll be watching carefully:
1. Local inventory transparency
The early adopter crowd won’t wait on hold or make a special trip just to check stock levels on the season’s hottest gifts. Innovators like eBay’s Milo and Retailigence are helping major retailers make their in-store inventory transparent online, saving shoppers time and effort.
It should even be possible to set alerts, so shoppers will be notified when gifts on their lists arrive in-stock. This one will be a tie-breaker this Holiday season.
2. Buy/reserve online, pick-up in-store
Some retailers will go one step further and let online shoppers reserve or pre-pay for in-store pick-up. Site-to-store models aren’t new, but fulfilling those orders from in-store inventory is less common. Walmart’s Pick-Up Today is a relatively new example of this.
Not that kind of in-store pick-up...
On a guided tour during our conference in late June, we learned that Best Buy is even installing pick-up stations at the front of some of its stores, including the Newbury Street store in Boston.
Creative options like letting shoppers pick up orders at warehouses and 3rd party locations like FedEx Office may also be adopted by more retailers as another way to leverage existing supply chains to get product to shoppers faster.
3. Gift recommendation engines
The power of recommendations is well known. By some estimates,Amazon derives 20-30% of its sales from its engine.
But Amazon’s engine is powered by transaction history and clickstream data. It’s predictive of the shopper’s preferences–not necessarily a gift recipient’s preferences.
Last year we saw Amazon integrate with Facebook to suggest gifts based on the recipient’s Amazon wish list (if they have one) and Facebook profile. If someone’s profile listed favorite books, music, movies, etc, Amazon integrated that data into its suggestions. If not, it made general suggestions.
I don’t have much insight into how effective the program was. Amazon didn’t promote it heavily, and I’m told by online retailers that shoppers are still reluctant to connect Facebook with their sites. But I do think Amazon was on the right track, and that this year we’ll see more sophisticated gift recommendation engines from several retailers.
The Like button has gone mainstream, creating a much richer dataset of shoppers’ brands and products preferences. And innovators like Hunch have proven that it’s possible to make highly accurate predictions based on limited preference data.
Wish lists & registries, free shipping, gift wrap, and other gifting strategies will still be key, but this is the year of the gift recommendation engine.
4. Group & social gifting
Getting duplicate gifts and not getting what you really wanted are among the few disappointments of receiving gifts. Group and social gifting models are trying to minimize it from happening.
These apps let friends and family chip in together to buy bigger gifts and discuss what others are planning to buy.
The idea has been around for years, but innovators like TheGiftsProject are making it much easier for online retailers to offer the functionality on their sites. (Check out eBay GroupGifts for one execution.)
5. Tablet apps
Data suggests that shoppers with both tablets and smartphones prefer to browse and buy on tablets. It makes sense; tablets’ bigger form factor is better suited to browsing product images & videos. Many retailers will launch dedicated tablet-optimized sites or apps in time for the holidays. Google’s new Google Catalog app is interesting too.
6. Social promotions
I’m sure we’ll see no shortage of socially-driven promotions, especially around Black Friday. Here are a few new strategies to watch for:
- Like/check-in/share-driven deals (shoppers qualify individually or in groups by taking social actions… especially store-centric behaviors)
- Influencer-targeted offers (exclusive promotions for social media influencers)
- Listening & intervention – With so many retailers using social media “listening” tools today, I have to believe that at least a few will watch for shoppers asking for gift ideas and interject with suggestions. Tough to do at scale, but Best Buy’s @Twelpforce could probably swing it.
7. Trade-ins
Retailers like Amazon, Target, and Best Buy all offer store credit for trade-ins on electronics and other big-ticket items. Retailers might feature these programs to help shoppers upgrade their gift budgets.
8. Real-time, targeted offers
Like the Groupon/Foursquare offers I described recently, I expect at least a few retailers to trial highly targeted offers that are only valid at certain locations and expire within a day. (Especially on Black Friday.)
9. Behavioral retargeting
If you’re on the web, you’ve probably experienced “behavioral retargeting,” which shows you ads for products or categories you’ve recently browsed on a retailer’s site.
This strategy is only going to escalate with Amazon’s entrance into the space, and a handful of major retailers will follow. More of these ads will be click-to-buy, too–especially mobile ads.
More to come
We’ll share our thoughts on retailer strategy as the season develops. RNG clients should check out our recent Back to School 2011 report and virtual store tour of BTS merchandising highlights.
What do you think will be different this holiday season? Let us know in the comments.
