Black Monday is 100 Days Away and You’re Not Ready For it Are You?
The most important marketing day of the year for many online retailers is fast approaching again. Black Monday follows Black Friday; the day after Thanksgiving, as the official start of the online holiday shopping season. But this year’s shopping trends are shaping up a bit different than previous years. And it’s earlier, too.
It’s hard to get excited about December with the smell of hickory smoke in your nose and the sound of mosquitoes in your ears. It’s months away yet; unless you’re a marketer. In fact, the 2009 holiday shopping season is already underway in many segments of the retail industry. It began somewhere about mid-July this year.
Many marketers are already deeply immersed in research and planning for the coming showdown and have been for weeks or even months. One constant that will remain in play is this: the guy in front at the end of the race wins. If you haven’t got your shoes tied yet, you better hurry, though. You’re not out of the running yet, but you will be soon.
So, What Hurdles Will You Face This Online Holiday Shopping Season?
Retail sales fell across the board in 2008 and that trend will carry over into 2009, according to a recent Reuters poll conducted by America’s Research Group. Forty percent of consumers polled said they will spend less this year than last. Under heavy pressure from a volatile economy, consumers will likely take more time to plan and consider purchases than in years past.
They further stated that their main buying focus will be on quality and value. Retail executives are not expecting this climate to change between summer and the holiday shopping season.
This sets the stage for a brutal marketing environment to gain promotional superiority and product position followed by a full blown knock-down, drag-out fight come Black Monday. Many experts predict this to be the most aggressive holiday shopping season on record between retailers. (Wolf, A (2009, July 20) “Dealers Prepare for Promotional Holiday Season”. Retrieved August 21, 2009, TWICE website)
What Are The Driving Forces Behind The Current Market Situation?
It’s not so much that any one thing leads the list, but when all put together at the same time, it makes for a turbulent atmosphere. Wolf’s piece dealt primarily with consumer electronics, but I believe it’s a microcosm of the retail industry as a whole.
Unless you’ve been living in a cave somewhere bartering wampum for food, you don’t need much explanation here. Even small children know things are tough all over right now. It’s not limited to the United States; it’s a global fiasco. People don’t know who to listen to or which way to turn: politicians say it’s on the road to recovery, economists say the worst is yet to come. Somebody’s wrong, but who?
So, people do what they always do in times like this: they circle the wagons and fall back on Maslow’s Need Hierarchy. They cast off self-indulgent things and tend to the three primary needs; food, shelter and security. One of the first casualties is the death of disposable dollars strangled by tightening purse strings. People shop harder, consider longer and purchase less.
Manufacturers are taking the “lean and mean” approach to their operations. They have cut staff, resources and prices to the point they are almost malnourished in some cases, just to stay afloat. At first glance, you would think this a boon to retailers, but it is having the opposite effect.
It creates volatility in retail pricing. As the wholesale cost of goods drop, the profit margin automatically gets an increase; until the price slashing starts. This quickly corrects the immediate gains back to their original margin more or less. If it ended there, it wouldn’t be too bad. But it doesn’t.
As part of their lean and mean approach, manufacturers have made a crucial adjustment here as well. They have stopped carrying, or at least severely curtailed their safety inventories of goods and gone to a just-in-time supply system. This poses a forecasting nightmare for many retailers; both on and offline. If they under order, they may run out of a hot selling item at a crucial time or if they over order, they may be left holding excessive inventories at the end of the year.
Another possible loss may occur on the haggling over the wholesale price with other retailers if supply drops below demand. Retailers may find themselves in a price war on the buying side of the street and thus further reduce margins.
The real fly in the ointment comes in the form of fixed expenses. As their name implies, they remain fairly constant. It costs just as …