Retailing in a Recession: E-Commerce Tips to Weather the Storm
Despite a difficult 2022, wrought with soaring inflation and mass layoffs, the retail industry ended the year in decent shape with a solid holiday return. However, an economic downturn looms large, as experts predict a 64 percent chance of a U.S. recession in the coming months. Naturally, this spells trouble for retailers as Americans tend to cut back on extras when money is tight.
As last year showed, America’s hunger to shop remains strong even in difficult times, and brands that tailor their strategy to meet cash-strapped consumers where they are stand at an advantage. On that note, there are a few key e-commerce considerations to increase a retailer’s chances of success in a recession.
Optimizing the Omnichannel
In today’s increasingly digitized economy, shoppers have varying preferences around which medium they choose to purchase from. Sitecore’s Brand Authenticity Report found that 30 percent of consumers only shop digitally, while 46 percent prefer the traditional in-store experience. This leaves a grey area of roughly a quarter of shoppers who don’t have an expressed preference. In a recession, retailers must maximize their consumer base, and an optimal omnichannel strategy can get the most out of the 24 percent of “undecided” shoppers.
First and foremost, it’s vital for retailers to conceptualize their official online store, social media channels, and physical storefronts as extensions of a single brand rather than separate entities. This requires software capable of enhancing the synergy between “boots on the ground” in-store and warehouse teams and digital teams to ensure orders are processed effectively, product availability is updated accordingly, and promotions are executed properly across channels.
Additionally, an omnichannel strategy presents an opportunity for multiple sales in one. If a customer submits an order for in-store pickup to avoid shipping fees, they may see something else they like while picking up their order and make an additional purchase. This “two birds with one stone” opportunity is possible when retailers expose shoppers to multiple mediums. A more immersive online experience can also help drive revenue.
While the days of everyone strapping on a virtual reality (VR) headset and walking around a virtual department store remain firmly in the more-distant future, shoppers crave more interactive experiences with the brands they love, nonetheless. The self-professed metaverse champions, Meta, recognize this and recently announced plans to launch a desktop and mobile version of its Horizon metaverse app that doesn’t require a headset. Retailers that follow a similar path can boost customer brand loyalty.
According to our Metaverse Report, 49 percent of consumers are excited to try and test new products in the metaverse. Furthermore, 87 percent say the metaverse will play an important role in how they shop and interact with brands. Rather than VR, retailers should focus their user experience (UX) strategy on better replicating the in-store experience. Not only will this help attract shoppers, but it can also reduce the costly effects of return trends like bracketing — i.e., where shoppers buy multiple sizes and colors of a single item and return the rest — by allowing them to virtually try and test different items together. It’s also vital for retailers to identify consumer trends so they can align their UX strategy accordingly.
Using Data to Align With Consumer Spending Habits
While it's difficult to predict how a recession will impact a brand’s consumers, brands can best prepare by ensuring they have the right tools in place to process customer data, draw effective analyses, and curate the respective solutions. For example, the ability to track cart abandonment rates, and the reasons behind those abandonments in real time, will help brands plot a course through the recession storm. Furthermore, if the collected data suggests that a significant portion of cart abandonments come after shipping costs are factored into order totals, retailers can prioritize promotions like “free shipping for orders over $50” to help alleviate consumer pain points. Retailing in a recession requires brands to be even more in-touch with their customers, and collecting accurate data can help make that possibility a reality.
The road ahead may be less than encouraging for retailers, but the right e-commerce strategy can help drive profits in an unfavorable economic climate. Leadership should ensure that their brand has an optimal e-commerce strategy to accommodate different shopper preferences, they’re providing more immersive customer experiences, and that their data collection can identify consumer trends and pain points. With that in mind, brands that are up to the task can survive and thrive despite the recession.
Mark Johnson is president of commerce at Sitecore, a global leader in end-to-end digital experience software.
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Mark is an accomplished entrepreneurial technology leader with 30 years’ experience building enterprise software and technology services businesses. Most recently he was CEO and Co-Founder of Four51, before it was acquired by Sitecore, where he led the development of a market-leading, MACH-certified, B2B e-commerce platform that highlights the capabilities of composable commerce for complex global enterprises. Mark holds a BA in Economics from St. Olaf College, and revels in disrupting markets and industries by enabling teams to look beyond today's requirements, delivering beyond what customers expect.