Peak 2023: Optimism Meets Strategy
In spite of economic headwinds, a recent survey revealed that an overwhelming 73 percent of brands anticipate increased holiday sales in 2023. Similarly, 67 percent of consumers report that they plan to spend as much money or more on holiday gifts this year compared to last.
However, years of supply chain disruptions and volatile consumer demand have left merchants cautiously optimistic, and they aren’t leaving anything up to chance. A full 93 percent of retailers say they’re shifting their strategy this peak season, primarily in one of two categories:
- more regular demand forecasting (79 percent); and
- more aggressive promotional schedules (84 percent).
It’s no surprise that retailers plan to entice inflation-weary consumers with deep discounts and promotions. To ensure profitability, they will closely monitor their sales velocity against projections. This strategy allows merchants to ride the wave of consumer demand — ratcheting up promotions to drive demand and pulling back on discounting when demand is high.
Survey results revealed a few key strategies merchants plan to leverage this year to entice holiday shoppers while preserving their margins.
A Breather for Supply Chains
The past several peak seasons have been marked by supply chain issues, from port congestion to warehouse capacity. Supply chain entered the mainstream media cycle, and consumers became acutely aware of inventory shortages and rising costs.
This year, many of those supply chain struggles have stabilized and merchants can focus on their top-line sales strategies and profitability. With customer acquisition costs high, they’re splitting their efforts between new customer acquisition and customer retention with some of the following promotional strategies:
- new customer discounts (57 percent);
- holiday deal days (47 percent);
- loyalty program perks (41 percent); and
- free shipping (32 percent).
It seems that many merchants are still holding some excess inventory but feel confident that they can move that inventory with buy-one-get-one (BOGO) deals and free-gift-with-purchase promos.
The Value of Experience
Beyond traditional promotions and discounting, merchants have also seen the role of customer experience in driving sales. Consumers report that services like one- to two-day shipping and same-day delivery will entice them to make purchases this holiday season, and savvy retailers are ready to oblige. In fact, a full 95 percent of merchants have expanded their delivery options this year.
Consumers have grown accustomed to fast shipping promises and now expect tailored delivery options like in-store pickup and the ability to choose their delivery date.
Fast shipping has become such an integral part of online shopping. In fact, 84 percent of consumers admit that they will buy at least some of their holiday gifts online at the last minute this year because they can rely on fast shipping.
That means retailers that hope to extend their holiday sales cycle should highlight fast shipping promises early and often in the buyer journey. And in order to convert those shoppers into loyal customers, they must reliably deliver on delivery guarantees and provide visibility with real-time tracking updates.
Tools for Success
Brands hoping to leverage these strategies for a successful peak season should prioritize three primary functions in their supply chain:
- Demand forecasting: Outbound forecasts are equally important to inbound forecasts for labor planning and scheduling carrier pickups.
- End-to-end connectivity: The ability to accurately calculate and display promised delivery depends on a supply chain that's fully integrated with all sales channels.
- Accurate delivery tracking: Today’s consumers expect visibility from the moment they check out to the moment their package arrives.
A stabilized supply chain and the possibility of increased consumer spending could indicate a return to normalcy in 2023. Retailers with the right strategies in place can certainly turn it into a profitable one.
Gabby Avery is the director of strategic programs at Ware2Go, an on-demand fulfillment and warehousing provider.
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Gabby Avery is the Senior Manager of Supply Chain Strategy at Ware2Go, where she is responsible for developing Ware2Go's warehouse network and supply chain strategy and expanding warehouse partnerships to enable merchants of all sizes to compete and grow. Gabby was previously a consultant at a global professional services firm and has an extensive background in supply chain analytics -- specifically inventory management, purchase planning, 3rd party logistics, strategic sourcing, and project management.