Make Black Friday Your Best Day Ever- By Tamara Saucier

Make Black Friday Your Best Day Ever- By Tamara Saucier
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Who will win and lose in what could be the best holiday in years?

Retailers have already started leaking their Black Friday sales announcements and prices.  In anticipation of this years shortened season everyone is getting a jump on this crucial period. Analysts and industry heads are making their annual predictions, consumers are making their lists of coveted items, and retailers are scurrying to ‘get it right’. When all is said and done, we will know too well which retailers have been naughty and nice!

It’s well known that the holiday period is the most decisive in retail. Up to 30% of sales and often a larger percentage of earnings are based on the success of these few months. So, who will the winners be this year? And who will be getting the proverbial chunk of coal in their stockings? And who will not be around next year to tell the tale?

The Holiday Predictions

The National Retail Federation (NRF) is forecasting holiday sales will grow between 3.8 and 4.2 percent, double from last years actual increase and keeping pace with the average increase over the last five years. Deloitte is even more bullish with their forecast projecting holiday retail sales likely to increase between 4.5 and 5%, with total holiday sales exceeding $1.1 trillion. These forecasts are projected whilst still recognizing the challenges and uncertainty of trade, politics, and other global dynamics.    

On the less optimistic side we have Bank of American Merrill Lynch (BAML) predicting a slowdown due to warmer weather, the shorter six week period between Black Friday and Christmas, increased inventories, and the trade war tariffs. Similarly, Pamela Danziger writes in Forbes’ What Do You Call A Holiday Retail Forecast That Ignores The Weather? Wrong how many predictions miss a major data input; namely the weather. Warm, cold, wet, dry, snow – they all drive consumer reactions and buying behaviors now more so than any other time of year.

Whether you buy-in to the bullish 5% or the minor slowdown of BAML, do you believe retailers have prepared accordingly, and adjusted their strategies significantly in 2019?

The Challenges

Last Thanksgiving weekend was the biggest online shopping weekend in American history, as sales reached $6.4 billion, according to Adobe Analytics.

That same 2018 holiday season also saw some well published major stumbling blocks across all sectors of retail. These included inventory shortages on key deal and promo items, lack of preparedness for online traffic increases, untrained staffing, under-staffed stores, lots of arguably unnecessary deep discounts – and many of those on too many poor-quality products, and one of the most frustrating to holiday shoppers – late deliveries.

These issues not only cost serious money in terms of lost sales; the missed promises and poor execution ultimately wear down customer confidence.

There are so many inferior experiences being reported in retail today. Every month we read how another ‘long-time’ brand is in bankruptcy, closing stores, or in a financial downward spiral. Companies who still have no clear strategy for differentiation. Companies who still cannot offer a consistent cross channel experience. Companies whose customer support model is not only outdated but effectively non-functional. Companies who have forgotten the basics of retail or even their very own raison d’etre.

The reward is there. So why are there so many retailers who still aren’t “getting it”?

The Winners

It’s clear that retail is a hard game. It’s not for the faint of heart. In the best of times retail brands are taking huge positions on trend driven items, balancing supply chains across diverse geographies, and attempting to satisfy an audience whose every buying behavior is changing.

The winners will be the ones constantly striving to improve the customer relationship and overall experience. The winners will be the ones seeking to innovate – the business model, the product, the range, the engagement model, the pricing strategies, the store experiences, the path to purchase, the fulfillment options, the sourcing practices – basically the ones who are open and willing to look at every operation through the lens of the customer experience.

Increasing customer expectations pressure all retailers. All year. Do not let Black Friday be your wake-up call. Consumer perceptions are set all throughout the year and they have surprisingly long memories of bad experiences. And many are willing and eager to share those impressions on social media. One poor experience grows exponentially in our ‘always on’ world.

In a recent earnings review, Barron’s describes winners as “….chains that offer consumers a distinct value proposition, or make shopping particularly easy, online or in person.” They go on to say that discounters are forcing other retailers to “continually prove themselves – or else” given the trends for low prices and convenience. That thought is not unique to the discount sector. Every retail model has its own set of challenges, but it doesn’t alleviate the need to bring to market a point of view, a proposition that is clear and consistently presented, and operations that are executed precisely.

Who will deliver flawless execution this holiday season and join (or remain in) the winners club?

The Reality

Certainly, retailers are being pressured from all angles. Margin contraction, global politics, tariff instability, new technologies, and escalating demands for sustainability and transparency. New brands and retailers often have a leg up on traditional retailers in that they can start with more agile operations and digitally native environments. Its often said these newest companies can be more innovative and focused as they don’t have to worry about the same scale of operation as the traditional brands. It can also be said that long-time retailers should have more knowledge and experience with their consumers than any new outfit. While that makes for interesting debate, the bottom line is that all operations should have on-going improvement, innovation, and investment strategies to stay relevant and compelling. And they all need to pass muster on the value they will deliver…….to their customer.

Each holiday season brings another opportunity for retailers to drive customer loyalty and satisfaction to new levels. This Black Friday will kick-off yet another round of the “will they or won’t they” analysis of survival and relevancy. There are too many retailers exhibiting long term issues that clearly test their viability. Making matters worse, many of these are well acknowledged but long ignored problems. The industry has been told for years to invest in digital, prepare for perfect execution, and deliver the best fulfillment strategies. And the primary rule of retail is to know your customer. So why isn’t leadership responding?

For a long time now we’ve been seeing the ramifications of retail leadership’s inability to change course. There are some challenges that highly capitalized companies will be much better positioned to solve. However, there are key leadership behaviors that are preventing real transformation inside once highly valued brands. They’ve lost focus, they’ve forgotten their customer, or their value proposition needs updating. We are not an industry where high waters raise all boats, it’s too fast and dynamic. There are lots of great strategies and options available – maybe too many – and retailers struggle to operationalize them. Many may bring conflicting priorities across the leadership team. Or the leadership team is in denial to the realities of being ‘just good enough’. Or the leadership has been indoctrinated in years of cost cutting as the priority solution. Or the leadership team was not able to sustain real down-the-line support. All these actions do not allow focus on the fundamentals nor how to organize around a prioritized approach. An approach that sets new expectations and ensures they are met.

There are a lot of options and strategies available. Who will have executed in time for this Black Fridays test?

The Annual Wake Up Call

There will be companies that will not survive long past the holiday. It is always a shame to see once loved brands fail. The competitive environment in retail is only going to get more aggressive. Consider your approach all year long. Your competitors have!

Every year we know what the market expects. The winners know this well and have done their homework. They know their customer well. They focus only on what drives or impacts that customer. They are constantly focused on change and progress. They are open to innovations and seek out inspiration across industries. They know responsiveness and seamless execution is the key.

The top 10 shopping days of the year are in this holiday period, with Black Friday the premiere event. Whilst we await the final performance numbers, we should ask ourselves if 2020 will be yet another year of too many losers – companies that have had plenty of time to make a move – and didn’t.

Where will you be shopping this holiday?