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Countdown to autumn: What's on the cards this year?

By Will Gillingham

Retail is a little more turbulent than it was this time last year. The scorching summer of 2018 raised spirits and loosened purses: people bought garden equipment to revel in the weather, hosted parties for the Royal Wedding, and rallied behind England’s most successful World Cup outing in decades.

Summer 2019 is a dismal affair by comparison: tepid weather and no national events to speak of. Without any summertime buoyancy aids, retail growth charts can begin to look rather stagnant, and it’s at times like these that attention may slip forwards in the calendar to the next big spending event: Black Friday.

So, what’s on the cards this year? Is the as-yet indiscernible bounce-back likely to occur? And how exactly is a year’s worth of underwhelming market growth expected to impact on an event where retailers traditionally slash prices? We approached our community of experts for their insight.

Discount the Discounting

Black Friday may look a bit different this year. Large-scale discounting relies on an engaged group of shoppers who are ready to spend, so that the dip in pricing is made up in quantity of items bought. And if the campaigns are miscalculated and sales fall short of targets? Well, usually, that’s fine: Black Friday should be an event which builds on the success of the year, rather than dictating it.

This year, those two premises are somewhat lacking: shoppers are being selective in their spending and, as a result, year-to-date growth has been stifled.

But that’s not to say Black Friday will be a lesser event – it will just be a smarter one.

Gavin Masters, Ecommerce Industry Principal, Maginus, explains: ‘Retailers need to become experts in balancing innovation and costs during the lead-up to Black Friday this year, and the race to discount as heavily as possible might prove too much for some. Year upon year of dwindling profit margins have taken many retailers to breaking point, and those looking to break the mould will have to incentivise customers to part with their money even when they may not be the cheapest available option. Value add, unique editions and other enticements are likely to pique customers’ interest just as much as the biggest discount in this year’s sales.

‘Bundling incentives and added customer service in with lower margin products may allow retailers to mitigate against low priced competitors. Creating exclusivity and additional value could also encourage buyers to pay a premium. Of course, some retailers will still discount, and discount heavily, but they may find themselves in the minority this year. It is certainly a declining trend, especially with non-clearance and branded products as brands are unwilling to compromise on the perceived value of their goods. October is a tricky month in which to try and discount because many consumers will still be recovering from the cost of summer holidays, and the dark nights and deteriorating weather will dampen their moods.’

Alecxa Julia Cristobal of AsiaPay is similarly minded, noting that Black Friday is an ideal opportunity to shift products which aren’t selling so well.

Cristobal: ‘Retailers are expected to come up with an effective brand strategy that would lead their businesses to continued growth during Black Friday, and one of the best ways is to selectively discount. Putting red tags or discounting on retail items can encourage a customer to buy more of that product than they otherwise would to capitalise on the deal and save a portion of their money. So, discounting those more unpopular items, or bundling them in with a sales-boosting product, can allow retailers to profit from unmarketable items.’

Perhaps Black Friday 2019 will adopt a different visage: one of the smart, or experiential, discount. But what is unlikely to change is the need for logistics options which can cope with the strain of the considerable uplift in sales volume.

Smarter Delivery

Peak, understandably, is the time of year which sees the most failed deliveries. Addresses can’t be found; buyers aren’t home to collect their items; the sheer number of vans out on the road, ironically, congests the delivery route. What may be seen this year is a revision of the entire post-purchase segment of the buying journey in order to streamline the process.

Three logistics innovations which may be revisited or enhanced this year are the uses of pick cart technology, box lot zoning, and pop-up distribution centres.

Joe Farrell, VP International Operations, PFS, explains: ‘PFS never really stops thinking about peak. As soon as the holidays are over, we begin a performance review from which we gather all the changes that need to be made to improve next year's peak. These are a mix of operational and systems changes and often add up to several hundred changes by the time our review is complete.

‘Major changes implemented for the 2018 peak season included new pick cart technology, box lot zoning and the use of pop-up distribution centres. With these and other improvements, we saw a 60% increase in pick productivity. Retailers must think outside the box and consider alternative fulfillment methods that can keep up with growing demand and increasing consumer expectations.’

In support of Farrell is Sian Hopwood, SVP B2B Operations at BluJay Solutions, who notes that smarter delivery methods aren’t merely needed during peak: ecommerce has evolved, and logistics is having to match its advancements year-round.

Hopwood: ‘The new normal for many businesses is waves of peak throughout the year. Why? The explosion of ecommerce and the increasing importance of customer experience have dramatically changed buying patterns and delivery expectations. And behind every pound spent, people in the transport and logistics industry are working diligently to ensure each step of the supply chain runs smoothly.

‘One of the biggest challenges transport and logistics companies face is the evolving retail cycle. Traditionally, we could expect peaks with Black Friday then Christmas. Now, retailers have embraced a steady calendar of events. To put things in perspective, on Amazon’s Prime Day last year in July, more than 100 million products were sold.

‘From a logistics perspective, the peak is smoothing out and many organisations aren’t coping well with the requirement for a constant level of scalability.  Fortunately, there are solutions that can help improve operational efficiency and the smooth flow of goods to put businesses in a better position to deal with peak periods. These can help improve supply chain visibility, continually optimise operations, and enable retailers to make the move to mobile – keeping up with both industry innovations and consumer expectations.’

There’s no doubt that delivery will continue to improve and innovate: indeed, an extensive increase in warehousing and the utilisation of drone technology were both highlighted as near-future delivery advancements in a recent article.

But will this year’s peak see yet more home deliveries made than ever before, or is there a chance that people will return to the high street this year?

The Return to the High Street

The current and future state of the high street is a conundrum in and of itself, and one that we covered back in March. But there are two reasons that this peak season could see a rebolstering of in-store footfall: a delivery bottleneck and the turn towards experiential retail.

This latter is an interesting point. It’s become a monolith of the retail conversation: the need to create a brand experience as well as selling excellent wares. Arguably, the high street is never more interactive than during the festive season.

So, with German markets roosting in the cities and most town centres investing in Christmas lighting and trees, can retailers ride the coattails of Christmas and encourage passers-by in-store with enticing festivities? Gavin Masters of Maginus thinks so.

Masters: ‘Everybody knows Brits love talking about the weather, and I suspect the weather may become key to the shape of this year’s autumn and winter retail landscape. We have become totally accustomed to same and next-day services, but a prolonged bout of bad weather might cause so much disruption within a supply chain that is already creaking at the seams, that people are forced to return to the high street, or wait much longer for their purchases. Under these circumstances, confidence in a retailer’s ability to deliver on their promises becomes key, and consumers may be willing to pay a premium to guarantee receipt of their items before the festive season.

‘Also, local businesses and councils need to work together to pull people back onto the high street. The proliferation of festive markets and other novelties is an excellent fillip for towns and cities that have struggled to encourage people away from the internet. By learning from this and extending these activities beyond Christmas into a variety of year-round town centre activities, the high street may be able to rejuvenate itself somewhat from its current slump.’

It’s certainly something to keep watch of, and something which could be boosted by the final piece of insight into this year’s peak season: the dominance of mobile phones.

Smartphones will dominate

Earlier this year, smartphones became the dominant device for shopping (over desktop and tablet), and the trend isn’t altering. In fact, Matt Robertson, Co-CEO of NetDespatch, is confident that peak this year will represent a milestone for the device.

Robertson: ‘Purchasing via mobile devices will dominate both traffic and transactions for the entirety of Black Friday. This will mark a milestone on the path to ‘mobile-only’ shopping behaviours and this is expected to grow exponentially. It is critical for retail brands to have a solid mobile-friendly offering for Black Friday, and to ensure that their apps provide that seamless shopping experience that users seek and come to expect.’

Perhaps this in-transit style of commerce will feed into the return to the high street; a more pliable, agile form of purchasing which eliminates the home as the anchor, and replaces it with whichever click-and-collect option is the most convenient at the time.

In Summary

There are consequences to most actions in life, and the consequence of the flattened retail year is likely to be a different style of peak: one that is smarter and more measured than previous years, perhaps, and one that orientates around the experience of the high street as much as it does around the buying.

Alongside this, it’s reasonable to expect a more refined delivery service and more people shopping via their smartphones than ever before. In essence, even with the trudging growth conditions of 2019, retail is still evolving, and this is likely to be on full display in Q4.

This is all mere speculation, of course. 2018 had a magnificent opening half, followed by a downtrodden H2, meaning the year-on-year growth potential for the latter half of 2019 is ripe for balancing the scales. And if that happens? Why, Black Friday may be business as usual. We’ll just have to wait and see.

Will Gillingham, Content Manager, IMRG

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