The holiday shopping season is on! This year, retailers are extending sales and incentives well before and after the traditional Black Friday and Cyber Monday shopping days. From electronics, apparel, and home goods to experiences and vacations, consumers are on track to spend billions of dollars this holiday season.
- The National Retail Federation forecast that holiday spending is expected to reach record levels by the end of this year and will grow between 3% and 4% to up to $966.6 billion.1
- Ninety-five percent of consumers say they plan to shop during the holiday season2
- It’s more than Black Friday and Cyber Monday — the shopping season starts early and will end late3
- Average consumer spending is up to $1,652 in 20234
Let’s take a closer look behind the scenes at how organizations prepare for the season through inventory management, marketing, technology implementation, and staffing.
Inventory Management: The Backbone of Sales Success
Ensuring proper stock levels for a surge in demand is a balancing act, as stockouts can lead to lost sales and customer dissatisfaction, while overstocking ties up valuable capital and can result in excess clearance or product markdowns.
To navigate this, retailers rely on sophisticated data analytics and forecasting tools to predict sales trends and optimize inventory allocation. The data is then used to predict demand and determine the optimal inventory levels. Here are a few of the strategies employed:
- Artificial intelligence (AI) inventory management
- Automated stock replenishment
- Demand-based inventory allocation
- Pre-ordering and bulk purchasing
- Just-in-time (JIT) inventory management
- Promotional planning
In addition to these strategies, retailers also employ other techniques to prevent stockouts or overstocking, such as:
- Clearance items
- Product substitutions
- Safety stock
By carefully managing inventory, retailers can ensure that they have the right products in accurate quantities to meet the holiday shopping surge.
Logistics: The Online Traffic Tsunami
Scaling for demand
Retailers must scale their infrastructure or cloud resources to prepare for a shopping influx. This may involve increasing server capacity, bandwidth, and database storage. They also must manage load balancing and caching solutions to distribute traffic evenly and improve performance.
In addition to infrastructure upgrades, marketing and operations teams must optimize websites and checkout processes for speed and scalability. This may involve using a content delivery network (CDN) to deliver static content from servers located closer to users or implementing a progressive web app (PWA) that can be installed on users’ devices and accessed offline.
Efficient order processing, shipping, and customer service ensure a smooth and positive shopping experience. Systems and processes must efficiently handle a high volume of orders and inquiries. This may involve hiring additional staff, expanding fulfillment centers, and partnering with reliable shipping carriers.
Companies are integrating new technologies to improve efficiency and accuracy in their supply chains. For example, automation and robotics streamline order fulfillment and picking processes. Artificial intelligence (AI) is increasingly used to predict demand and optimize inventory levels.
In line with AI, retailers use data analytics to identify and address potential bottlenecks in their supply chain. Today, orders are processed and shipped quickly and accurately, even during the busiest shopping days. Here are examples of the tech that retailers use to improve logistics:
- Analyzing data analytics to manage supply chains
- Displaying digital signage to display potential changes throughout the season (especially pricing)
- Enabling robotics in fulfillment centers.
- Using drones to deliver packages to customers in select markets.
Marketing Magic: Crafting the Hype
The holidays aren’t only about deep discounts but also about creating a sense of excitement and urgency that drives consumers to buy. Businesses employ many marketing strategies to generate buzz and hype.
Promotions: Retailers launch comprehensive marketing campaigns in the weeks leading up to Black Friday, Cyber Monday and beyond. Email marketing is a staple, with retailers sending out newsletters and targeted promotions to their email lists. Messaging on social media platforms, such as Facebook, Instagram, and X, also plays a crucial role in driving traffic to retailer websites.
Influencer marketing has emerged as a powerful tool in tandem with social media. Retailers partner with popular influencers on social media platforms to promote product reviews, hauls, and discount codes to their followers.
Urgency: The psychology of limited-time offers and exclusive deals drive sales. Retailers use countdown timers, early access promotions, and limited-quantity deals to encourage impulse purchases. These tactics play on consumers’ fear of missing out (FOMO) and motivate them to act quickly before the deals disappear.
The Human Element: Staffing and Customer Service
Staff preparedness: As we peel back the layers of what it means for companies to be holiday-ready, we find that people are a key building block to success and satisfaction. Retailers that invest heavily in training and staffing strategies to manage a high volume of customer interactions come out on top. The truly successful businesses begin recruiting seasonal help months in advance. They offer comprehensive training programs focused on product knowledge, sales techniques, and crisis management to handle high-pressure situations.
Customer experience: The quality of customer service can make or break a retailer’s season. High-quality service leaves customers with a positive experience that often leads to more sales. Amidst the chaos of slashed prices and limited-time offers, seamless checkouts, personalized shopping assistance, and practical problem-solving, the customer experience remains vital to every bottom line.
One thing remains certain: the commitment to meet and exceed customer expectations will continue to drive the evolution of the holiday shopping experience.
For more posts about tech and the holiday shopping season, explore the following articles:
- ‘Tis the Season for Online Shopping Scams
- Augmented Reality Is the Future of Shopping
- Don’t Leave Data Security at Home When Traveling for the Holidays
- National Retail Federation, 2023 Holiday to Reach Record Spending Levels
- Deloitte, 2023 Deloitte holiday retail survey
- McKinsey, “Holiday shopping in 2023: ‘It started early and will end late“
- Deloitte, 2023 Deloitte holiday retail survey