Inflation is hitting every industry, threatening margins in all sectors and countries. The Reserve Bank of Australia recently announced the inflation rate hit 7.3% in Q3 2022, from 6.1% in Q2 – a 32-year high. With rising inflation rates, consumers have become more mindful of their budgets and spending priorities.  

This decrease in discretionary spending is bad news for Australian retailers. While we are seeing the industry start to adopt high-profile Black Friday and Cyber Monday campaigns, marketers need to take care to ensure these initiatives land well with consumers and produce positive engagement, rather than being treated as just more noise. Retailers will need to jump at the window of opportunity the holiday season provides to recover from the sales slump in the past quarters – if they know how to connect and engage with consumers in the right way.  

Shift to online stores requires more attention 

It’s been well documented that the pandemic expedited the uptake of online shopping as lengthy lockdowns caused consumers to flock online to meet their retail needs. While physical restrictions have largely been removed for the past year, the impact of the pandemic on online retail will last well beyond the recovery phase. For retailers, sustaining the online sales momentum requires them to pay greater attention to consumers’ shopping experience, while moving past a myopic focus on ad-based targeting.  

Traditionally, physical stores have been more inclined to improve the shopping experience, adding value through tangible elements like providing couches where companions of shoppers can wait or offering refreshments, especially in the case of luxury shops. Without the element of tangibility, online shopping requires more creativity, and this is a gap retailers need to plug as they look into building connections with customers online.  

Forming a lasting impression that turns one transaction into repeat purchases is all about effective communications throughout the purchase journey: identifying moments of truth, and sending the right message to consumers at the right time and channel. One area that most online retailers typically overlook is after-purchase customer engagement, and during the holiday season, the days after Christmas are especially crucial as these are the biggest return-and-exchange days of the year.

The value of having stellar after-sales customer engagement cannot be over-emphasised: customers need to feel heard and supported even after purchasing items, or the relationship won’t progress beyond a single transaction. This is where technology – including WhatsApp messaging and chatbots – can provide a two-way communication avenue for live exchanges, enabling retailers and consumers to resolve after-purchase issues more efficiently. By putting the focus on building relationships with consumers online through quality conversations, retailers can move beyond one-sided transactional engagements and inch closer to winning customer loyalty.

The comeback of physical stores  

Online shopping may be here to stay, but in-store shopping won’t be going anywhere either. Physical stores, after all, still offer more product visibility, allowing consumers to see, feel, and test products before purchase. 

As restrictions eased, we saw consumers were inclined to engage in in-person experiences after a long hiatus. For a lot of consumers, click and collect is fast-becoming the preferred option as this addresses online shopping pain points including long delivery times and shipping costs, which can dampen the holiday spirit for shoppers in a rush. But that’s not to say that retailers can just take it easy this holiday season: amid inflation-induced pressure, consumers demand convenience and exceptional service from retailers more than ever. This means consumers can easily get frustrated with long waiting times in-store, or late updates on the status of their pickup orders.

Given rising customer expectations, retailers can benefit from having an omnichannel communication strategy that boosts their ability to deliver excellent in-store shopping experiences. With access to data and information from customer interactions across all channels, offline sales agents can continue conversations in-store, and effectively recommend additional services and items shoppers may potentially be interested in. 

Leveraging data to delight customers  

With gimmicks a plenty during the holiday season, brands that personalise emails and alerts using behavioural, psychographic and demographic data can better differentiate themselves from the pack. With 70% of Australian consumers preferring to talk to human agents over bots, retailers should focus on communicating with mindfulness – instead of sending automated messages that fail to factor in shoppers’ varied interests and preferences.

Furthermore, 8 in 10 (81%) of Australian consumers are more likely to do business with a brand that allows them to start conversations over messaging.  When these messages are sent, the channels used to deliver them matter in the new age of engagement. In Australia, traditional messaging remains the default channel to communicate with brands, with an overwhelming preference for SMS (52%), with Facebook Messenger coming in second (45%), followed by Instagram (30%). Delighting customers through targeted messaging can create positive impressions, which translate to repeat purchases, brand loyalty, and word-of-mouth promotion. 

What consumers don’t want in their shopping carts 

Data privacy issues can easily turn holiday shopping into a nightmare and information security is top of mind with Australian consumers following the recent high profile data breaches. Implementing security precautions, including protecting and streamlining product registration, authentication, and recovery, can prevent hackers and data breaches from taking the fun out of holiday shopping.  

Trust-based shopping means that consumers today are prioritising security as they interact with retailers through applications and communication channels. Retailers that don’t step up their security game with low-friction, strong customer authentication could potentially lose customers, who have become more conscious about sharing personal data. Besides protecting consumers, having a secure digital presence also protects retailers from online payment fraud – allowing them to enjoy holiday season sales with peace of mind. 

One thing is certain: as we head into summer, holiday shopping will continue to be an annual tradition in 2022 and beyond, with this time of the year heralding a season of gift-giving and countless sales events. Amid the flurry and excitement, there lies an opportunity for brands to refine their customer engagement and communications strategies, both online and in-store. In the throes of post-pandemic recovery, retailers that are able to connect better with shoppers during the holiday season have a higher chance of improving their bottom lines and finishing the year on a high in spite of decreased consumer sentiment and discretionary spending brought about by inflation. 

David Coghill is regional vice president of solutions engineering for Asia Pacific & Japan at Twilio.