Be Careful, Retailers Are Gunning For Your Christmas Cash Already

Never mind that students in the Northeast haven’t even stepped foot inside the classroom.

With back-to-school goods lining the shelves and marketing plans already in place, the season is pretty much a done deal for retailers—save for any last-minute price cuts to clear out unpopular items.

Now, companies are shifting their focus and using early lessons from the second-largest selling season to shape their strategies for the Super Bowl of retailing: the winter holidays.

“No question retailers are using back-to-school as their final testing ground for the holiday season,” said Steve Barr, U.S. retail and consumer leader at PwC. “That’s on a broad range of things from styles and fits and colors, but it’s also through the vehicle of how they best connect with the consumer.”

Shoppers pass by a Victoria’s Secret store. Photo Scott Mlyn /CNBC

Although most retailers have already placed the bulk—if not all—of their orders for the holidays, several are making smaller bets up front and analyzing early sales results to determine if they want to shore up their investment on certain items or colors. Two retailers using this strategy are Gap-owned Old Navy and L Brands‘ Victoria’s Secret.

For those who have already finalized their merchandising decisions, there’s still some wiggle room in terms of where they’ll flow that product to best capitalize on sales trends and cut down on delivery costs, said Rod Sides, U.S. consulting leader for retail and distribution at Deloitte.

“They can look at trends by geography [to determine] where a certain trend shows promise,” he said.

Retailers are also using the fall selling season as a means to test processes that enable shoppers to buy merchandise online and pick it up in store.

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Kohl’s, which completed the rollout of this capability during the second quarter, said it will begin marketing the feature in the fall as it looks to shore up the percentage of online orders that are fulfilled in this manner. Currently, online orders that are picked up in store account for only about 2 to 3 percent of its digital purchases.

Though there has been significant buzz related to in-store pickup across the industry, HRC Advisory President Farla Efros said many retailers didn’t realize how quickly consumers would come to expect these capabilities. As a result, they remain “quite behind.”

“It’s really about having the right infrastructure to be able to support the consumer demand,” she said.

Another way retailers are responding to consumers’ shifting demands is through social media. Efros said that during the back-to-school shopping season, companies put a greater social emphasis on wants-versus-needs-based items, in an attempt to capitalize on consumers’ renewed confidence.

That doesn’t mean deals are no longer important. Barr said retailers are also playing with their promotional strategies to see the types and timing of deals that best resonate with shoppers.

“One of the main levers that they can pull is to try to have that initial touchpoint with the consumer,” he said. “They have a limited amount of spend, [so] they’re trying to capture that earlier.”

And as the digital shift continues—with mobile, in particular, gaining traction—retailers are ramping up their technological capabilities for in-store and on-the-go shoppers.

Target said earlier this month it is testing beacon technology, which enables shoppers to receive relevant promotions when they’re in certain areas of the store, in 50 locations.

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Also this month, Wal-Mart changed its website over to a “responsive” design, meaning the content on the page adapts to the shopper’s screen size. The world’s largest retailer also launched a speedier online checkout in June, which simplified the process from five screens to one.

And on its second-quarter earnings call, Best Buy management said it continues to tinker with its “Athena” big data project, which allows it to highlight more personalised offers to shoppers.

CFO Sharon McCollam said the technology gets “better and smarter” each quarter—something CEO Hubert Joly said should give the electronics retailer a boost over the holidays.

Sides added that retailers are running a lot of tests to ensure their mobile and desktop sites can handle an influx of traffic at peak times. Last year, a flood of mobile traffic caused a handful of retailers to go dark on Black Friday—something experts at the time attributed to flawed design functions.

It’s critical that retailers solve these issues, as mobile traffic is only expected to increase over the holidays.

“That’s a trend we not only expect to occur through the remainder of back-to-school and holiday,” Barr said. “That is a permanent shift.”


This feature originally appeared in CNBC.


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