For leading retailers, it is clear that traditional schedules for promotions and discounts will no longer be sufficient for delighting customers, protecting margins, and navigating challenging supply chains.
Last year, tried-and-true discounting timelines went haywire as Black Friday deals were elongated to offset fulfillment challenges and retailers were forced to deeply discount the seasonal items that were delayed due to supply chain disruptions. In fact, over half of the products available online in January were advertised as discounted. With past discounting patterns being all-but ineffective at withstanding the present challenges, retailers are struggling to optimize profitability.
In a year with continuing supply chain issues and inflationary concerns, market and enterprise intelligence provides the path forward for retailers that have to navigate excess inventory from delayed shipments, meet consumer demands in their assortment planning, and stay flexible when planning new arrivals off schedule. The secret to success lies in understanding what is happening at the SKU level and working to differentiate from other retailers.
With market intelligence, retailers can follow the global marketplace to develop promotion and assortment strategies that stand out by sending the right message, setting the right price, and getting ahead of trends.
Sending the Right Message
Heavy discounting periods like Black Friday and Cyber Monday create a lot of noise for buyers. In 2021 EDITED found that profitability was down 3% for Black Friday and 9% for Cyber Monday, prompting reflection on how promotions should be calculated. To improve the success of promotional periods, retailers should create unique experiences for shoppers that break through the noise of a busy inbox. Strategies could range from a unique annual sales day like Amazon’s Prime Day or a new take at messaging around discounts.
Before retailers initiate a new promotional strategy, they should take the time to study when and how competitors are promoting their products. With market intelligence, retailers can see all promotional communications from competitors worldwide to pinpoint trends and spot opportunities. If November is a busy promotional time for a retailer’s competition, even the most well-crafted, personalized email messaging might be filed as trash. The retailers that create unique messages at a unique time will improve their open rates and sales.
Setting the Right Price
Setting the right price doesn’t have to threaten margins. Last year, retailers shifted their pricing strategy and began to distribute markdowns across promotional thresholds instead of simply applying steep bulk discounts to the entire assortment.
Retailers can use market intelligence to inform AI-driven pricing tools to track competitor pricing and the price preferences of their target audience to sell through existing inventory without destroying margins. Even before a product launches, retailers can analyze competitor pricing for similar products to find the ideal price point. By applying market intelligence, retailers can avoid over discounting.
Getting Ahead of Trends
Offering new styles and trends can be risky because these fads often end as quickly as they begin. With market intelligence, retailers can invest in the latest trends without losing their edge. These tools give retailers the chance to evaluate competitor assortments for styling gaps and understand which products have frequent stock-outs.
Furthermore, retailers have started promoting newness over large discounts. EDITED’s research team found that the word “new” was used 15% more than the word “sale” in the first few weeks of 2022. This trend contradicts the 27% YoY decrease in new arrivals but stresses the importance of offering new and trending clothing that sets each retailer apart from the competition.
Knowledge Is Power for Retailers
As the conditions surrounding the retail industry continue to fluctuate regularly, the cliché “knowledge is power” rings true. With market intelligence retailers always have access to what’s trending, what’s selling and what’s winning. These powerful insights will lead to increased profitability for years to come.
— Juliana Prather, CMO, EDITED