The holiday season is quickly upon us so it’s a good time to check in with our best practices for end-of-the-year sales in a normalized market.
Let’s remember that coming out of the pandemic lockdowns sales accelerated, creating unrealistic blips in normally cyclical data. Retail sales cycles usually run in patterns, unless there is an anomaly, like a financial crisis, or severe weather event. And the Covid 19 pandemic was the longest anomaly we have seen in 40 years of retail record keeping.
During the pandemic recovery, holiday sales soared 33% from Oct. 1st to Dec. 31st 2021, according to our client data. In 2022 sales began to soften, showing a 4% gain in December after a bumpy November.
This year, predictions range from a 3% to 4% increase, with the lion’s share of sales coming from online. This moderate growth is more in-line with the overall 2.9% sales increase we saw back in 2018, according to the National Retail Federation.
So, how do we make the most of this normalized cycle without the tailwind of pent-up demand?
Let’s get back to the fundamentals.
Here at Blacks, we are forecasting small, single-digit increases for both women’s wear and menswear, with menswear outpacing women’s. In order to meet and potentially exceed these goals you need:
– A Well Thought Out Marketing Calendar
Pre-pandemic holiday sales relied heavily on a series of in-store events and promotions. These events should pepper your calendar from mid-October up until Christmas.
Be sure to include in-store contests for the sales staff. Whether it’s “Pass That Buck” on each Friday and Saturday starting November 17th (Friday offers a $50.00 win, Sat $100.00), or selling contests that build from Nov. 17th until Dec 25th. In general, salespeople like contests; they’re fun and can mean a special something at the end of the season.
– Unique Inventory Landing Just in Time
With demand softening, we need to focus on special products that get customers in the mood to buy. When you land these products is important. Talk to your retail analyst about how to plan receipts along the demand curve.
-A Planned Markdown Cadence
During the sales rush of the last few years many merchants forgot how important markdowns can be in a normalized market. Start with the small promotional discounts of 10% to 15% to entice demand. Often, these help you pull in customers that end up buying full-priced items.
Remember, markdowns are an important tool in your toolbox. And if you are left with excess inventory at the end of the year you better be ready to go steep with discounts quickly. We are already seeing inventory rise at an uncomfortable rate in comparison with sales. Don’t leave yourself with negative open-to-receive come January, since newness is key to continued sales in the normalized cycle.
-A Personal Touch
We work primarily with specialty stores and by definition they should provide a special experience to customers. This is why they are willing to pay a little bit more to avoid a generic consumer experience. Handwritten notes from salespeople, free gift wrapping, and in-store parties for best customers are all strategies that still work and should be implemented.
-Goals and Incentive Plans for the Sales Staff
Let’s not forget about our sales staff. Establish goals and incentives to support them.
These goals need to focus on:
-Size of transactions
-Margin per transaction
-Selling the most expensive items in the store
-Multiple visits by clients
-Turning average customers into meaningful clients
All of these examples mean more revenue dollars for the store and build incentives around growth. Remember, big goals are always better.