Black Friday has risen to become one of the most anticipated dates on Australia’s shopping calendar, with the event heralding the start of the peak Christmas sales period. However, sharp interest rate increases and rising inflation are putting downward pressure on the economy, forcing consumers to tighten their wallets and cut back on discretionary spending.
This is not good news for the retail sector, which last year experienced a record surge in sales volumes (8.2 per cent) in the December quarter, according to figures released by the Australian Bureau of Statistics (ABS). Today’s current economic climate may mean that retailers could miss out on the approximately $55 billion spent in Australia over the eight-week period leading up to Christmas, according to oOh!media.
There are four major challenges contributing to these tougher economic times.
Cost of housing and rising interest rates
Discretionary spending is starting to dry up as the cost of housing and subsequent rising interest rates take hold. The RBA has announced a series of interest rate rise of 0.5 per cent over the last few months, putting further pressure on household budgets. With tighter purse strings, consumer spending will likely slow down, and businesses must find innovative ways to optimise on-shelf performance.
Inflation
It’s highly unlikely that retailers will experience record sales this coming peak season, especially as Australia’s inflation is set to peak at an annual rate of 7.75 per cent by the December quarter of 2022, according to Treasurer Jim Chalmers.
For general mass and specialty retailers, inflation can lead to cash flow disruption, excess inventory, and lower revenues. This puts further pressure on retailers to ensure the right strategies are in place to support their brand and maximise exposure on shelf.
Cost of logistics for brands
Brands and retailers are raising prices as freight costs soar, but if prices rise too fast, retailers risk decreased consumer sentiment. In addition, if the trucking industry is successful in their bid to achieve a wage increase, these costs will also get passed onto the consumer leading to higher price inflation which may force retailers to cut back on the limited staff they already have.
Staff challenges
Retailers are finding it near impossible to hire suitable staff, severely impacting their ability to trade at their full potential. Retailers therefore need to look beyond traditional talent solutions because, as it stands, retailers with limited staff are struggling to stock shelves and service customers, resulting in lost sales opportunities. The issue prompted liquor retailer, Dan Murphy’s, to implement an audacious on-the-spot job interview campaign, offering a 10 minute job interview to anyone who walked into one of their 258 stores across Australia.
However, with signs of consumer sentiment dropping, some retailers may be forced to reconsider their pre-Christmas sales strategies. Outsourcing field marketing to an innovative service provider to support sales growth could be clever way to surviving and thriving in a high-inflation environment.
Anthony Di Francesco describes the following benefits of tapping into the expertise of field marketing agents as an outsourced solution:
Accountability
Given today’s economic volatility, brands can’t afford to spend money without measurable results. With accountability, retailers can achieve better returns on investment and higher levels of growth performance than those who don’t.
While there tends to be less accountability for internal teams, an outsourced field marketing company will hold itself fully accountable for results, which is important as it links to financial performance and strategic initiatives.
Variable costs
Brands are starting to ask themselves how they can manage field teams more flexibly and avoid paying fixed costs daily. Outsourcing can help reduce fixed costs companies that need to scale periodically and gives them the option to switch the service on and off as needed.
This can deliver a considerable saving for brands, especially those wanting to improve the perception of their in-store brands without the hefty price tag.
Retail sales enablement
Sales enablement is completely customer-centric and aims to equip sales teams with the content, guidance, and training they need to effectively engage buyers. Outsourcing consumer sales enablement not only saves retailers time and effort, but it also makes positive changes to sales strategies to empower staff to pitch prospects more effectively and close more deals. However, it goes beyond sales. Experienced field marketers can prepare sales teams before the peak season by ensuring they are set up for relationship building, brand training and advocacy, in-store merchandising and promotions.
Sophisticated technology
The latest digital tools give field marketers the correct data and insights to make better strategic decisions. It can even make the difference between a successful partnership and a lost opportunity. CROSSMARK’s StoreTrack app and business intelligence systems can keep track of field visits, monitor trends and ensure product on-shelf is optimised for sales success and performance. The app can also identify opportunities to implement smarter strategies, so staff aren’t visiting stores unnecessarily. Improving your overall return-on-investment often requires you to scrutinise the visits you do as much as the visits you don’t do.
As the busiest time of the year approaches, retailers need to be savvy about how they maximise their sales, especially given the current turbulent economic conditions. Working closely with a field marketing agency that uses intuitive technology can be invaluable to improving brand awareness, boosting sales at targeted locations, and increasing engagement at a local level.
At CROSSMARK, we deliver flexible and data-driven solutions to support faster sales growth for our clients. With access to software analytics, we can analyse data sources, undertake field team modelling, and develop a deeper level of analysis, to find new revenue opportunities and gain a competitive advantage.
Anthony Di Francesco is director of mass and specialty at CROSSMARK Australia.