After the holiday season comes to a close, it’s time to get creative. Many returns are in and gift cards have been put to good use, so how do you get your repeat and even new customers to check out again? The answer lies in the combination of what your competitors have done in the past and your own internal data.
Promotions in retail have gained a bad reputation lately, unless you’re looking at it from the consumer perspective, of course. Retailers and brands fight tooth and nail for market share, especially because Amazon is always lurking. Amazon has no problem cutting prices and they have the ability to try out categories and products to see what fits their business model best. That leaves the rest of retail scrambling to hold onto their customers by lowering prices to stay competitive.
In order to keep sales up, promotions are a necessary evil. They cut into margins, but with the tips we have for you below, we’ll explain how to get that psychological pricing boost that promotions bring without letting the discounts erode profit margins.
How to One-Up Competitors on Retail Holidays
You have deep knowledge of how your promotions did last year, but what about how your competitors performed? A Wiser client had a big holiday coming up (Green Monday) and they used our data to look at their number one competitor’s Green Monday promotional data from the previous year. Armed with this data, our client put some marketing investment into beating that competitor by one day and running those promotions earlier. Green Monday ended up being their biggest sales day (besides Cyber Monday) of the entire year.
Promotions don’t have to hurt, instead they have to be crafty. Getting the timing right and beating the competitor to the punch is a way to see sales jump, while still protecting margins. Retailers need to change their strategy based on what the competition is doing in order to go to market with the best possible offers and promotions.
Running Promotions at the Right Time
Timing is everything. A great promotional offer at the wrong time will get a retailer nowhere. Sure, with the growth of online retail, any time can be shopping time. But figuring out when competitors were able to catch shoppers’ attention with promotional offers will clue you into what timing you should consider.
One of our clients requested to know when competitors were mentioning specific categories on their homepages and how those long promotions ran. This is key information to be able to plan promotions at the right time and end them after the optimal number of days or weeks as well. Picking the right day when shoppers will be browsing and open to a promotional offer will start you off on the right foot. Then, the next step is to add in a time constraint that encourages them to buy now instead of later.
Getting Promotional Assortment Right
Timing is important for promotions, but what exactly you’re promoting is as well. Even if a promotional item is 95 percent off, if it is something the customer would never consider buying, then that promotional campaign is a waste. Looking at what products competitors constantly feature on homepages week over week could indicate trending products that are hot in the market. Adding top selling products to your assortment periodically will help you compete better, but first you’ll have to gain insight on the best sellers in your category.
In addition to homepage and email promotional data, we’ve also worked with a few customers on discounting trends to see how many styles are on sale during a given promotional period. This insight helps retailers plan promotions on the right products, instead of losing margin on items that would have sold at full price.
Promotions Are More Than Pricing
Percentage and dollar off promotions attract shopper attention, but so do other promotions, like free gifts and free shipping. One of the age-old questions in online retail is whether shoppers prefer free shipping over discounts and the answer to this conundrum depends on who your target is. But the moral of the story is that there are several ways to run promotions and it’s best to try out several iterations to find what works best.
One of our clients, a leading vitamin company, wanted to know if their competitors were running more free shipping promos versus percentage off or dollar amount off. With these findings, they were able to adjust their promotions strategy appropriately with offers that appealed to shoppers and looked great within the competitive landscape.
In order to save margins while planning promotions, retailers need to gain a comprehensive understanding of what promotions their competitors run. With that information, you can optimize prices, choose the right days to promote the right products, and one-up the competition.
Need better data to inform your decisions? Whether in-store or online, Wiser has you covered from pricing to assortment to promotions. Schedule a meeting today to learn how to turn retail data into action.