Inventory Issues Continue to Plague Big-Box Retail, but Can the Holiday Shopping Blitz Provide Some Respite?
The pandemic has introduced a number of challenges for retailers, from the chip shortage to in-demand items being out-of-stock to now severe overstocking that's forcing some retailers to cancel orders in an effort to save profits. The retail market continues to change rapidly along with the uncertain economy, and this is driving ebbs and flows with inventory volumes. Retailers are now left scrambling to find ways to sell extra stock, identify which products are in demand, and cut costs in the face of rising inflation — all while heading into their busiest season.
Quantum Metric’s Retail Benchmarks Report points to inflation’s impact on consumer spending as the likely cause for today’s overstock issues. Simply put, Americans are cutting back on their shopping because they have to. In fact, 76 percent of Americans have cut their spending by 25 percent, and 38 percent have halved their spending in 2022 in an effort to manage their finances during this historic inflation period. As retailers eye a potential holiday comeback, data suggests a few key strategies can help set them up for success, regardless of stocking concerns.
The Power of Suggestions
Due to high prices, 53 percent of Americans have stopped purchasing items from some of their favorite brands. Coupled with 85 percent of Americans experiencing out-of-stock issues monthly on the items they do want, retailers need to implement creative e-commerce strategies to point shoppers away from out-of-stock items and towards what’s in stock. A suggestive user experience will help online marketplaces move inventory while reducing friction and maintaining customer loyalty.
When in-demand items are out-of-stock, online stores often see an increased bounce rate. By adding or improving the “shop similar items” function that suggests similar items that are in stock (or even overstocked), stores can drive down bounce rates — something that Bass Pro Shops benefited greatly from. With 37 percent of consumers preferring cheaper alternatives to name brands, implementing an online shopping experience that recommends alternative items when a customer’s first choice is sold-out helps move overstocked inventory while preserving the retailer-to-customer bond.
Holiday Shopping Fueled by Points and Perks
Forty-five percent of Americans have opened new credit cards in the past month, and many (39 percent) are on the hunt for cards specifically with holiday reward perks. For retailers looking to move surplus inventory, Black Friday presents a great opportunity to cut losses. Considering the majority of Americans plan to shop on Black Friday (81 percent), retailers and consumers alike can “cash in” on the day. While consumers plan to leverage credit card points/rewards to fund their purchases, retailers will be able to trim physical and digital shelves while boosting loyalty and improving experience through store card memberships.
Refocus on Retention
At a time when high prices are turning many consumers away from the brands they love in favor of cheaper alternatives, retailers should prioritize marketing efforts toward customer retention. Little things like ensuring returning customers can log into websites and mobile apps with ease go a long way in helping them stick around. Retailers can capitalize on the holiday rush and keep regulars from going elsewhere by ensuring reward redemption is easy and advertising their Black Friday deals.
For retailers, investing in online user experience to enhance features like “suggested items” can help them respond to inventory fluidity, whether it’s converting excess inventory into revenue or resolving out-of-stock problems by promoting what’s in stock. Additionally, improving the UX will help retailers to maintain customer loyalty. Partnered with a focus on customer retention, “Big Retail” can mount a comeback.
Elissa Quinby is senior director of retail insights at Quantum Metric, the pioneer in continuous product design.
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Elissa Quinby is senior director of retail insights at Quantum Metric. As a go-to-market and industry lead, Elissa provides expertise that supports retailers ability to optimize the digital customer experience. Prior to joining Quantum Metric, Elissa spent seven years with Amazon Retail holding roles across multiple verticals and various functions.