The Key to Success this Holiday Season? Let Consumer Behavior Be Your Canary
By Neej Gore, the President of the Data Cloud Division at Zeta Global
The impact of the COVID-19 pandemic has – and continues to be – felt by every industry around the world, for better or worse.
Unsurprisingly, the retail sector has been severely impacted over the course of the last six months, largely due to the uncertain economy which has led to record levels of unemployment. As a result, many consumers are being more cautious with their spending, focusing primarily on the essentials to maximize their in-home working and living experiences, rather than luxuries.
Now is the time of year that retailers typically make the most profit; in fact, holiday retail sales have grown by an average of 3.25% year-over-year for the last 20 years - except for the 2008 Great Recession, when holiday retail sales declined by 4.7%. This year may also be an exception.
Zeta’s data shows consumer foot traffic to brick-and-mortar stores is down by 45% year-over-year across all retailers. In particular, retailers that sell clothing, apparel, and accessories have taken a massive hit, with foot traffic down 80% year-over-year. While sectors showed some variation, the commonalities were unmistakeable:
- Department stores experienced a 72% decrease in foot traffic year-over-year;
- Health and beauty supply retailers experienced a 62% decrease;
- Electronics and cell phone retailers experienced a 55% decrease; and
- Sporting goods stores experienced a 50% decrease.
As the holiday season approaches, retailers are left wondering how they can make up shortfalls from this challenging year and beat out the competition to maximize profits.
In response, retailers need to rely heavily on data to understand and connect with today’s new “shopper,” who have entirely different priorities and behaviors than ever before.
This season, some retailers can expect to see more foot traffic than others
Today, many retailers are strategizing ways to maximize Black Friday, Cyber Monday, and beyond – all while taking into consideration entirely unprecedented factors.
Despite the challenges, the retail industry is still expected to see a 20% surge in overall foot traffic during the season, when compared to figures from earlier this year.
Taking an even more granular look, certain types of retailers can anticipate a greater surge in foot traffic than others. For instance, retailers that sell arts, crafts and hobby supplies can prepare to see a 44% uptick in foot traffic, when compared to prior months – making this subsection of the industry a likely contender to regain the most in-store momentum. Similarly:
- Department stores and malls can expect to see a 39% uptick in foot traffic;
- Clothing, apparel, and accessory retailers can expect to see a 32% uptick;
- Health and beauty supply retailers can expect to see a 26% uptick; and
- Big box retailers can expect to see a 25% uptick.
Even though retailers will not experience the typical “Black Friday boost,” which is traditionally capable of lifting retail foot traffic by as much as 48%, the industry will still see a modest increase in foot traffic and spend. This increase could be bolstered further by a potential second Government stimulus package.
In all scenarios, retailers who will win the season will use data-driven insights to personalize their marketing campaigns by understanding consumers’ individualized product interest and intent, geographic nuances, and behaviors.
How to digitally transform your business for the holidays and beyond
As retailers approach the holiday season and beyond, it will be important for them to recognize and react to dynamic shifts in consumer behavior, taking into consideration external factors and trends that affect shoppers globally.
To retain existing customers and acquire new ones, retailers will need to evaluate – and potentially change – the ways in which they aim to reach their target audiences.
Some strategic marketing recommendations include:
- Build trust and reliability with consumers by addressing their personal needs through empathetic marketing
- Make strategic changes based on consumers’ behaviors in digital vs. offline and recognize that this is the “new normal”
- Invest in audience segments that that demonstrate the greatest growth and interest as these will likely produce the strongest ROI
- Gain a competitive advantage by having a 1:1 marketing approach that drives more customer conversions and engagements; leverage personalization in as many digital touchpoints as possible and even extend to offline channels like direct mail
With access to the right consumer data and insights, retailers can form more meaningful connections with both existing and potential customers – just in time for the holiday season.
About Neej Gore
Neej Gore is the President of the Data Cloud Division at Zeta. He is focused on guiding global data strategy, innovation, and the transformation of assets into business value. Prior to Zeta, Neej founded two popular digital marketing platforms, and was part of the founding team at Boomtrain which Zeta acquired.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
