Retail marketers do more than sell during the holidays—they go to school.
With hordes of customers in stores, it is a time for moving merchandise. But how they do so is closely scrutinized for lessons that can lead to improvements during and after the holidays.
Early holiday faux pas
There are, of course, some crash courses, with Best Buy so far the standout. Over the busy Thanksgiving holiday weekend, web managers had to engage in fast on-the-job training to bring up a massive online system that broke down...twice. While this is (so far) the highest profile holiday faux pas, problems are occurring across the board.
Empty shelves bear witness that some popular products did not receive enough orders. Conversely, stacked merchandise demonstrates the overzealousness of some merchandisers.
Some people are still waiting for products they ordered before Thanksgiving. And long lines are blemishing customers’ shopping experience.
While mistakes are costly, savvy retailers also plan to learn from them.
“The holiday is the real litmus test for retailers,” said Robb McCarter, senior product manager at Newgistics. “Is everything going to hold together? Because every second that something happens means money.”
Retailers must take time to prepare for what may happen now, and how it will be addressed after the holidays.
Holidays are a learning period
While easy to say, preparing for the holidays is not an easy task given the many moving pieces around this time of year.
Indeed, amid the crush of buying, all the linchpins of retail—including marketing, product purchases, call centers, warehouse staffing, and technology—all have to be aligned.
“If something is out of synch in any of these areas, there is a direct and sometimes dramatic effect on revenue,” McCarter said.
This is harder during Christmas because of the sheer volume of transactions and interactions with customers.
“If something goes wrong it ranges from, based on the severity, ‘How do we stop the ship from sinking’ to ‘How do we patch it now and learn from it later,” according to, McCarter.
The biggest balancing act for marketers is the holiday promotions retailers use to attract shoppers; but they also can be huge learning opportunities.
Marketers want to know “what’s bringing people into the store, which items are cherry picked, which promotions work, and how do they get more people into stores when ecommerce is more prevalent,” said Jonathan Marek, senior vice president at Applied Predictive Technologies. “It didn’t used to be this way. Now, they use the holidays to understand what they need to do to bring people in the future.”
For instance, if an LCD TV is priced at $99 and moving briskly during the holidays, but didn’t at $120 during the rest of the year, the goal would be to make sure the product can still be sold below $100, with enough profit margin. That means going to vendors and negotiating.
“The biggest mistake is not knowing the economics of the deals they offer,” Marek said. “Smart retailers watch prices very, very closely, take that knowledge and apply it going forward.”
"Retailers doing things differently"
When taking a broader view of promotions this holiday season, it seems that deals were offered earlier than ever. This could cost retailers going forward.
“We seeing retailers doing things differently,” said Kurt Kendall, partner at Kurt Salomon. “They started running Black Friday-type promotions almost immediately after Halloween and are continuing this activity all the way until Christmas.”
This has pulled business away from Black Friday, and it remains to be seen if it will have a positive impact on overall holiday performance. One thing is sure, though: Early promotions desensitize customers to deals, because they know they no longer have to chase them.
“The customer is much more cautious about buying the latest offer,” Kendall said.
Early lessons learned
Retailers may have to learn a hard lesson about planning next year’s promotional calendar.
“They may have gone overboard and will likely pull in the reins for next year,” according to Kendall.
The mistakes and lessons that retailers are learning are not just coming from internal forces. Social media has changed the way companies deal with scrutiny, as customers become faster in pointing out where they feel merchants are coming up short.
Clarabridge, a consumer sentiment monitoring firm, monitored Facebook and Twitter to gauge the experience customers had with retailers in-store and online on Thanksgiving and Black Friday.
The findings included customers being “very upset,” with Target, with the phrase “false advertising” coming up frequently on Black Friday, primarily because there was a 40 inch TV advertised for $119 that could not be found in stores or online, said Susan Ganeshan, chief marketing officer at Clarabridge.
Staff took a drubbing because some felt that, when asked about the TV, they misdirected customers to Target’s online site, while the retailer’s call center told them to go to stores.
“The solution is educate your staff,” Ganeshan said. “And from a merchandising standpoint, be more careful about your inventories.”
Black Friday "is one of the busiest shopping days of the year and the demand for key items is always high," a Target spokesman responded. "The holiday season is a busy shopping time, we always encourage our guests to shop early if they have specific items at the top of their wish lists."
The survey also found that Wal-Mart received many posts due in part to slower-than-expected checkout times at some of the nation’s biggest retailer's locations. On the upside, Wal-Mart had plenty of inventory for items it was promoting.
For Kohl’s, there was frustration around using the retailer’s website, the survey said.
“You have to have the same great experience on the web as you do in store or you risk losing loyal customers,” Ganeshan said. The lesson, she said, is “try to be consistent with your online presence.” A Kohl’s spokeswoman did not respond to a request for comment.
But Kohl’s had some high points, too. The retailer had the highest number of generally positive tweets on Black Friday, after holding a contest for a $500 gift card.
“Kohl’s blew every other retailer out of the water and that’s important because it created buzz,” about the department store, Ganeshan said.
Costco and Nordstrom were viewed highly because they were closed on Thanksgiving, with the retailers lauded for giving their employees the day off, an increasing rarity in retail.
“The message here is you can have increased sales by being open Thanksgiving, but you may be sacrificing long-term customer loyalty,” Ganeshan said.
And customer loyalty is what it is all about, a sentiment retailers already internalize. How to retain this loyalty requires ongoing schooling.