Why certainty beats discounts for consumers in 2021 peak trading

Global supply chain disruption has come at a difficult time for UK retailers and delivering on promises will be key to maximising every peak trading opportunity.

Why certainty beats discounts for consumers in 2021 peak trading

Global supply chain disruption has come at a difficult time for UK retailers and delivering on promises will be key to maximising every peak trading opportunity.

As we approach the festive period, retailers are understandably desperate to maximise the potential of an ever-growing online customer base during peak trading season. But with rising costs  and uncertainty around whether many products will arrive in the country in time for Christmas, let alone Black Friday, retailers need to bring plans forward if peak season is to deliver an essential revenue boost.

Fuelled by a growing awareness of the likely shortages, customer expectations are changing, with switched on customers beginning to prioritise certainty over price, especially for time sensitive Christmas items. Retailers with great inventory information, a flexible promotions model and excellent fulfilment will be able to deliver the certainty and control required to meet expectations ‘ and, as a result, minimise discounting, even during peak season.

Shifting priorities 

Whether looking to bag a bargain on Black Friday or stocking up on gifts for Christmas, shopper behaviour always changes during peak season. This year, however, the changes are likely to be more pronounced, with concerns already raised about the availability of items, including food and toys,  due to well-documented global supply chain problems. 

With unprecedented changes in customer behaviour, forecasting demand has become ever more complex over the past 18 months. Online retail grew 36% in the UK during 2020, according to the IMRG Capgemini Online Retail Index, with some sectors, such as gardening (222.5%) and electrical (90.8%), experiencing an extraordinary surge. The new complexities of inbound supply chain challenges are driving further changes in customer behaviour. With consumers increasingly faced with out of stock notices online and gaps on supermarket shelves, shoppers are starting to prioritise delivery certainty over price, especially as they plan for Christmas. 

Despite these new challenges, this peak trading season also provides new opportunities for retailers to maximise sales without necessarily embarking upon the now traditional big discounts for Black Friday. Customers have come to expect discounts of at least 25% on Black Friday, but are such significant reductions really affordable this year, given the climate of spiralling wages and soaring delivery costs? This puts retailers with stock already in place and confidence in their fulfilment model in a strong position, with the opportunity to drive additional revenue from customers willing to pay more for guaranteed delivery.

Taking stock

Planning ahead is vital for any retailer hoping to maximise peak trading season and, critically, deliver on promises. Now more than ever, it is essential that retailers know what they have, and what they can deliver, when. Vague promises will not meet customer expectations. What’s in stock today? Can it be promoted? How quickly can the business respond to customer demand? 

It is vital that supply chain information is up to date and accurate: promoting products online that are not yet in the warehouse ‘ or even in the country ‘ risks huge customer disappointment and can cause irreparable brand damage. Edgy customers will not hesitate to contact customer services if products arrive late, adding even more cost to the business. Retailers therefore need to be realistic about whether they can deliver on fulfilment promises ‘ customers would prefer to get a product at the agreed time than be let down by over-optimistic next day delivery options.

Retailers who are proactive about the use of promotions will be able to control the sales process, both maximising sales and reducing the risk of fulfilment delays caused by excessive demand. Carefully curated and managed promotions will not only slow down sales of popular items to ensure fulfilment can be managed effectively but also boost the uptake of slower moving goods.

Meeting the demand

With delays to inbound stock likely to persist, especially from the Far East, retailers should also view the 2021 peak trading season as an opportunity to tackle the slow-moving lines that are clogging up expensive warehouse space. Not only will this address the ongoing issue of ageing stock, but it also enables retailers to promote stock with confidence, with items already in the warehouse providing the certainty of delivery by a set date. 

Retailers should act fast, as taking the time to assess old stock and identify any items to fill the gaps created by supply chain delays will enable them to develop specific promotions and put them in a great position to respond to customer demands. A flexible sales process that allows retailers to add extra discounts and encourage conversion for products that are not selling can also make a significant difference in overall sales levels.

Fulfilment is key

This year, peak trading could be problematic for any retailer trying to manage every aspect of the process internally. Scaling up for the period is always tough but 2021 threatens to be even more challenging. Added to the well-publicised lack of delivery drivers, staff shortages are making it difficult to recruit to cover the spike in warehouse demand. With limited stock available, there is no leeway for damages or losses: fulfilment efficiency has to be a priority. 

This is where third party fulfilment services can step in. Dedicated fulfilment providers are better placed to scale up in response to peak season demand. With strong inventory management and real-time analytics and reporting, a value added fulfilment provider can ensure retailers maximise every peak trading opportunity. Plus, working alongside a fulfilment provider can enable retailers to put in place delivery promises that are realistic and achievable ‘ delivering the customer certainty that will be key to winning business in 2021.

Getting every aspect of this model right is incredibly important this year ‘ those who can deliver a great experience will successfully convert the new online customer base of 2020 into long-term, loyal customers. 

James Hyde
James Hyde

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