While the economy came to a stop this year, business has to move on and planning for the autumn/winter 2020 season is well underway. Much has changed, making forecasting difficult. What’s important is to make decisions now.
We recently asked 14 owners and senior directors of ecommerce businesses about how they saw the prospects for their brands in Q4. Their answer? Overwhelmingly optimistic – but with a few notes of caution.
Why? Well, as mentioned in my last post, the growing number of people shopping online (especially amongst older demographics) the Black Friday predictions, and the fact in-store shopping is less appealing means direct sales are expected to grow considerably in Q4
To take advantage of the opportunities, you should be thinking about four critical areas.
- Focus on your core products. It is time to be selective, and it’s essential you understand your product range and customers. If you have a wide or diverse range, you could reduce this down to those bestsellers that you know will be in demand. Lessening lines won’t necessarily have a significant impact on your sales, and a number of our clients are buying up to 30% less stock for this autumn/winter. Range reduction is not just to do with profitability. Long lead times from countries like China and Turkey brings uncertainty around guaranteeing products. With this in mind, you should be factoring this into your stocking plans. When it’s hard to forecast, being risk-averse is not a bad approach.
- Focus on your customers. Knowing your customers is essential for any business. With current behavioural shifts, this is even more important – what you used to know about them may no longer be valid. Analyse your existing customers to understand what they look like today. How are they buying and how often? Are they engaging differently with you? You also need to analyse your recently recruited buyers. Do they look like your existing customers, or are they different? Will they shop the same way in the future, or are they short term opportunities? Understanding the makeup of your customer base and how it may have shifted will inform your targeting and messaging decisions to ensure your marketing is effective.
- Focus on digital transformation. As people have altered their purchasing behaviours, online is the big winner. A study by Alvarez & Marsal and Retail Economics estimates nearly a quarter of the UK population will permanently change how they shop, preferring online to in-store. It also found a significant group of people new to online shopping have embraced it – and intend to continue this habit. With changing behaviours, you need to be scaling up your digital presence and focusing on getting your digital offering right, to reflect this consumer shift. Even retailers are being forced to do this. Inditex, the owner of Zara, has announced store closures and a plan to “reinforce all of its brands’ e-commerce capabilities”. At the same time, H&M is shutting stores while “…accelerating our digital development, optimising the store portfolio and further integrating the channels.” to reflect significant changes in consumer behaviour.
- Focus on channels that drive sales. In this multi-channel world, it’s essential to understand each channel’s role in the path to purchase. With these insights, you can make better, more informed marketing decisions that directly impact sales. Attribution is vital here. You must be gauging the effectiveness of your channels by analysing their impact and contribution to a transaction. Channel value changes over time, and the consequences of the last few months have significantly altered this for many companies. Only by understanding your customers buying preferences and behaviours can you make marketing and budgeting decisions to develop effective, customer-centric campaigns that deliver results.
Above all, take action now. At times of uncertainty, the danger is to procrastinate. Put a stake in the ground, make decisions about autumn/winter – however cautious – and that will give your business a focus to move forward. And if you need help in any of all of these areas, we’re here to help.
