Holiday Selling Season Lessons Learned

Free shipping abounded with no minimums required, while the new offering was free returns, a questionable but growing strategy
January 12, 2017Allison Zisko

TargetBlackFridayTarget CEO Brian Cornell (in gingham shirt), Chief Merchandising Officer Mark Tritton (in black jacket) and Target employees await customers on Black Friday at a Jersey City, N.J., store.
By Allison Zisko

The highly promotional 2016 holiday selling season started early and led right into Christmas, and while final sales numbers are still being calculated, a few retail lessons and operational trends emerged.

Not surprisingly, there was a big shift to e-commerce. Cristina Fernández, director and senior research analyst for Telsey Advisory Group, said she saw less traffic in home furnishings stores on Black Friday, which was heralded as a successful day for retail in general by the National Retail Federation and others. For home furnishings retailers, however, it seemed like an “ordinary day,” according to Fernández. She noted a big shift to online sales, aided by free shipping with no minimum purchase offers.

Retailers have gotten better at offering a seamless experience between their physical stores and their e-commerce platforms. “While more purchases may be completed via desktop, many shoppers may start the shopping process on their mobile phone,” said Ivy Chou, content marketing manager at BlackFriday.fm, which compiles Black Friday deals, promotions and ad scans from top Black Friday merchants for consumers.

“There is increasing harmonization, in general,” between retailers’ e-commerce and brick-and-mortar operations, but because e-commerce is dynamic and faster moving, it is tricky to maintain consistent messaging across platforms, said Steve Goldberg, president of The Grayson Company, a retail consulting firm.

In the lead up to Black Friday and Cyber Monday, Target CIO Mike McNamara said the mass merchant was ready to flex its omnichannel muscle. “I predict we’ll start to see more and more retailers merge their online and stores strategies and promotions. In this case it means bringing online events like Cyber Monday into physical stores,” McNamara said in A Bullseye Newsletter. “Gone are the days when retailers need to be anxious about buzz phrases like multichannel, omnichannel, showrooming or webrooming. These terms merely nod to the new reality of how consumers shop.”

Fernández noticed more integration of online and in-store promotions and said the ability to buy online and pick up in store (BOPIS) is executed better by some home retailers than others. Home retailers in general got better at shipping faster and more efficiently, she said, but “the industry still needs to evolve.”

“We’ve definitely been seeing more options to buy online and pick up in store,” Chou said. “In fact, it’s working well enough that some generous offers are being given by stores like Target, Dick’s Sporting Goods, Home Depot, and other large retailers where you can get $10 back or get exclusive discounts by selecting this option. It’s a smart way to overcome shipping charges, especially on large ticket purchases like furniture and big screen TVs.”

Any bounceback activity that gives customers an incentive to return to the store at a later date is a good idea, noted Goldberg.

Like Fernández, Chou said free shipping abounded, and many retailers dropped the minimum threshold needed and gave free shipping on orders of any size. Shipping discounts ran until Christmas or later, and some retailers offered free return shipping. “In contrast, just one to two years ago, Macy’s required a $100 minimum to get free shipping, and they didn’t offer free return shipping until this year,” said Chou.

Although Goldberg’s firm does not track free returns, he said he considered it a slippery slope: “You have to be disciplined not to go down the path of no profit.”

 

Analysts’ Retail Tips

  • Remember, the shopping process starts on mobile phones.
  • More efficient shipping is a must.
  • Pay attention to planning and allocation so that promoted items are available on every platform and in every store.
  • Beware of over discounting. “Discounting is the road to perdition,” said consultant Steve Goldberg.
  • If product is unavailable, don’t send the customer away empty-handed.
  • Offer a coupon or other incentive to return to the store. Offer compelling product. Nothing else matters if you don’t have great product.
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Allison ZiskoAllison Zisko | Managing Editor/Tabletop Editor
azisko@hfnmag.com

After 15 years of covering the tabletop industry, Allison Zisko is still as enthusiastic as ever about the dinnerware, glassware and flatware categories. An in-depth analysis of how the category works intrigues her just as much as the latest fashion trends. As managing editor, Allison oversees the daily e-newsletter and works behind the scenes to help produce the print issue each month. She also directs HFN’s housewares coverage and covers the cutlery category. An avid reader, Allison is eager to talk to anyone and everyone about the latest book they are reading.

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