The holiday sales period is game time for most discretionary retailers, with the Australian Retailers Association finding merchants can earn up to 67% of their profits for the year between November and January. But once peak sales season is over, many merchants face the challenge of dealing with last year’s lingering inventory.
Unsold goods can make a dent on profits and cash flow, while taking up precious warehouse space and convoluting stock management. This is compounded by the growth in retail returns, a direct result of more consumers buying items sight unseen.
Let’s unpack some of the tools and actionable strategies today’s retailers can deploy to move old inventory and develop new best practices in the meantime.
1. Re-engage loyal customers through personalisation
KPMG’s Australian Retail Outlook for 2024 flagged personalisation as a key driver of advocacy and loyalty. A recent Intuit Mailchimp report found that 87% of customers are more likely to click into an email if it is tailored to them, with 71% more likely to consume from a company that sends them such emails.
It’s clear personalisation is now table stakes, with savvy businesses leveraging data insights and segmentation to align with individual preferences and behaviours.
By employing targeted content and customised experiences, while fostering engagement and continuous improvement through testing, businesses can enhance customer satisfaction, boost retention rates and increase lifetime value.
AI and predictive modelling can add a layer of sophistication to this strategy, and aid in identifying the customers most likely to respond positively to such efforts. Audience dashboards, for example, use predictive modelling to learn from previous purchase data and create segments of customers based on how likely they are to buy from a particular shop again, and how much they’re likely to spend. These are valuable insights that can be used to reward VIPs or bring occasional buyers back.
2. Test-and-learn to apply novel discounts
Employing a test-and-learn approach allows businesses to experiment with different discount amounts to find the optimal level that maximises sales without sacrificing profitability, and experiment with more innovative ways of offering customers an appealing promotion.
One novel approach is to run a declining discount, starting with a high percentage price cut and then continuously decreasing it throughout the day.
This is a technique we saw craft coffee roaster PERC Coffee use to great effect, starting with a 35% markdown on all orders at 8am, and then dropping the discount every hour until 2pm, creating a sense of urgency to convert more shoppers. This strategy brought PERC its highest grossing day for online sales, and the business now runs it monthly.
3. Move items along by rewarding customers or bundling products together
Shoppers can also be incentivised to take low-selling stock home in the form of a free item. For example, if they spend a certain amount on the transaction, they’ll be gifted the item.
If a retailer leverages an eCommerce platform like Shopify or WooCommerce, they’ll have insights into their customers’ spending habits and the more popular products. Segmentation allows them to divide their audience by purchase activity and spending habits, and target consumers that tend to spend more with free items. According to Intuit Mailchimp’s ‘This Holiday, It’s Personal’ report, the top 1% of loyal customers spend 2.5x more per order than the lower 99%.
Combined with personalisation tactics to ensure the content they’re sending speaks to their customers’ interests, this can be a powerful method to boost brand loyalty and move stock.
Another option is packaging it with other items to make it more appealing to the clientele by either combining it with more popular goods or promoting it as a complementary product. Marketing automation tools help automatically sync merchandise, giving the option to promote multiple items together.
4. Reach shoppers through a mix of channels
Informing the target audience about the previous initiatives is crucial for their success. Spreading the word through an omnichannel strategy helps amplify them even further.
While social media remains effective, marketers should consider exploring alternative and emerging mediums such as SMS, email marketing, influencer partnerships, community forums, and industry newsletters. This approach will not only help a retailer leverage insights from many marketing channels to connect with prospective customers wherever they’re most likely to buy, but also provides opportunities to meet the existing customers on the channels they are most likely to use.
In today’s diverse market landscape, businesses often encounter myriad demographics and consumption habits within their target audience. Embracing an omnichannel approach empowers marketers to finely tune their messaging to reach these diverse demographics and consumer preferences, maximising the impact of their initiatives.
However, seamless integration across channels is key. There needs to be consistency and coherence in the brand experience, regardless of the engagement platform. Using the ‘offseason’ to experiment with new channels and content times means your business will have accurate benchmarks when deciding on peak season communications strategies.
5. Re-merchandise slow-sellers
Sometimes the issue is not the item itself, but the merchandising around it. A low hanging fruit for retailers may be breathing new life into a product by repositioning it to a more prominent section of the website or store floor. Another great way to do that is by building a landing page for “Last Chance” items to give them another opportunity to pique customers’ interests.
Instead of relying on intuition for this, marketers can leverage AI-powered tools to analyse customer and past performance data against industry benchmarks and best practices. By gaining actionable insights into consumer behaviour patterns and preferences, marketers can then refine their content strategies, optimise product placement, and even forecast trends more accurately.
Integrating such technologies empowers brands to enhance their merchandising efforts for a more efficient and optimised execution.
Out with the old, in with new sales opportunities
In the ever-evolving landscape of retail and ecommerce, it might sound easier to give up on unsold inventory. But in the medium-to-long term, such decisions may inevitably incur significant costs for businesses.
With innovative strategies and insightful data, retailers can breathe new life into slow-sellers. Moreover, leveraging diverse channels and personalisation enables them to boost sales and achieve sustained growth in today’s highly competitive market.
Ken Chestnut is global head of ecosystem at Intuit Mailchimp.