holiday shoppers Archives

As the economy recovers from the COVID-19 pandemic, inflation has surged in recent months affecting both retailers and consumers gearing up for the holidays.

In November, Digital.com surveyed 1,000 retail owners and executives to discover how inflation is impacting profitability, pricing, and discount offers this shopping season.

Our findings revealed that more than half of retail businesses are using inflation to drive up prices higher than what’s necessary to offset increased costs.

Key Findings

-56% of retail businesses say inflation has given them the ability to raise prices beyond what’s required to offset higher costs

-Over half of retailers have increased prices by 20% or more on average

-52% of businesses are offering fewer or no discounts this holiday season

-Shrinking discounts and increasing price of complementary products are most popular ways businesses are driving up prices

56% of retail businesses have increased profits beyond inflation to boost profitability

When asked how recent inflation has impacted profitability, 56% of retail businesses responded that inflation gave them the ability to raise prices beyond offsetting costs.

Large enterprises (LEs) were more likely than small and medium-sized businesses (SMBs) and small and medium-sized enterprises (SMEs) to say they were using inflation to more than offset costs at a rate of 63% compared to 52% of SMBs and 55% of SMEs.

“What’s interesting about our findings is that more than half of respondents say that while they used inflation as a reason for price increases, they expect higher profits as a result,” says Digital.com’s small business expert, Dennis Consorte.

“In other words, businesses are inflating already inflated prices in order to turn a bigger profit amid people’s fears over uncertain times.”

Automobile, e-commerce, and electronics industries most likely to hike prices

Our survey revealed that the automobile, e-commerce, and electronics and appliances industries were most likely to be capitalizing on inflation.

Of the businesses we surveyed who belonged to the automobile industry, 72% indicated they raised prices to more than offset costs. Sixty-five percent of e-commerce and 62% of electronics and appliances businesses also admitted to price gouging.

Over half of retailers have increased prices by 20% or more

Eighty-five percent of businesses have increased prices, and 55% of retailers have increased prices by 20% or more on average.

Of those who have increased prices, 28% of large enterprises increased prices 50% or more, compared to 6% of SMEs and 12% of SMBs.

When asked why they have increased prices, 66% of businesses cited rising inflation, 69% supply chain issues, and 57% increased demand.

52% of businesses are offering fewer or zero discounts this holiday season

This holiday season, 38% of businesses will offer fewer discounts than last year, and 14% will not offer any at all.

Smaller businesses are offering fewer discounts this holiday season compared to larger enterprises. Fifty-seven percent of SMBs and 56% of SMEs say they plan to offer fewer or no discounts, compared to 36% of LEs.

It comes as no surprise to Consorte that many small businesses are offering fewer discounts this year.

“Many small businesses are still recovering from lockdowns and other COVID mandates. With the Omicron variant upon us and inflation at a 30-year high, decision-makers feel uncertain about future revenue. For them, fewer discounts could be seen as a way to keep the doors open through the holiday season.”

Clothing and accessories (74%), electronics and appliances (66%), and furniture and home furnishings (57%) are the industries that are most likely to be offering fewer discounts this holiday season.

Businesses are increasing price of complementary products, shrinking discounts

Among businesses that have increased prices, 55% shrank discounts, and 48% increased the price of complementary products.

Furniture and home furnishings (51%), health and personal care (50%), clothing and accessories (50%), and electronics and appliances (45%) are the industries that are most likely to have shrunk discounts.

The industries most likely to have raised the price of complementary products include automobile (61%), building material, gardening equipment, and supplies (46%), electronics and appliances (45%), and health and personal care (43%).

Businesses are also using pricing tactics such as shrinkflation, increased surcharges, and bundling to drive up prices.

“We’re still in a period of fear and uncertainty about the economy and legislative responses to COVID-19. We can expect unusual pricing tactics for as long as this continues. Some merchants will continue to raise prices out of fear, while others will take advantage of their customers’ fears to realize higher profit margins. When the Zeitgeist of our time returns to baseline, so too will merchants in their pricing methodologies,” says Consorte.

Methodology

All data found within this report was derived from a survey commissioned by Digital.com and conducted online by survey platform Pollfish. In total, 1,000 U.S. retail business owners and executives were surveyed. Appropriate respondents were found via a screening question. To qualify for the survey, each respondent had to own a retail business or be an employed executive at a retail business. This survey was conducted on November 18, 2021. All respondents were asked to answer all questions truthfully and to the best of their abilities. For full survey results, please email julia@digital.com.

This article originally appeared here. Republished with permission.

The most wonderful time of the year…is here. You already know that the holiday shopping season is the most critical period for retailers, both online and brick and mortar. How your business does during the last quarter of the year determines where things land for your bottom line.

This year, though, brand and e-commerce marketing managers are facing another wild ride, with uncertainty created by shifting trends. The pandemic brought on a surge in online buying, and many buyers are likely to continue to buy online. In fact, according to September 2021 survey data, consumers are planning a 50/50 split between online and brick-and-mortar buying. The retail giants—Amazon, Target, and Wal-Mart—are already capitalizing on convenience to hold onto their share of wallet.

There are other factors, though, to consider. Shopping trends are changing fast. News of supply chain pressures and worldwide shipping delays has spurred many shoppers to buy early or shift their buying behavior — 83% of shoppers intend to start before Thanksgiving this year, in a departure from the norm. In such an unpredictable market at such a high-stakes time of year, business intelligence has never mattered more. This is where the performance analytics platform Line Item can be the lifeline e-commerce marketers need right now to ensure they make the most of the holiday season.As we head into the heart of the 2021 holiday season, here are a few strategies to prepare and protect your digital shelf for the upcoming holidays.

Focus on organic search ranking. Whether they’re buying online or in person, many shoppers start their research online—on a smartphone or a tablet. This is why it’s essential to monitor and improve your online search ranking. Watch where you’re showing up, too. Moving from page 2 to page 1—and even into the top 10 listings—can significantly boost your sales. Improving your organic search ranking depends on visibility into what’s working—or not—for your brand. This is where Line Item can help, with detailed insight into what changes you could make to content, product descriptions, or imagery to affect your ranking in organic search results.

Analyze your paid search strategy. Shoppers are pressed for time, and you have only seconds to capture attention when it comes to search results. The holiday season is the time to invest in a robust paid search strategy, but you’ll want to be sure you understand what product attributes drive value. This is where Line Item can give you valuable campaign-level and product attribute insights. With them, you can better understand what’s driving the market and what your competitors are doing, so you can sharpen your edge and see ROI from a page-1 slot.Ensure your product detail pages are complete. This is a biggie. Incomplete or inconsistent product detail pages can harm you, whether we’re talking about Amazon listings or your own website. Across your e-commerce portfolio, all product detail pages should be complete, correct, and compelling. Line Item can help with this to make sure you aren’t overlooking clear areas or gaps that prevent you from meeting category bestseller benchmark standards.

Evaluate your SEO strategy and campaigns. During this volatile time of year, whims and demand drive the market in unpredictable ways. And that’s during a typical season, which 2021 is anything but. It’s essential to drill down to campaign elements, including CPCs, to ensure you have a read on how changing demand, sudden interest, or seasonality might be driving spend. E-analytics insight from Line Item can help you ensure your campaigns are profitable and that your overall marketing spend ultimately drives return on investment.

Watch out-of-stocks closely. Maintaining optimal inventory is key to profitability. When a customer is ready to buy and your product is out of stock, you lose the sale—and maybe the customer, too. Line Item helps you determine if out-of-stocks are hurting your revenue.

Track pricing. Many retailers are introducing new pricing strategies to drive sales this holiday season. Buy Now Pay Later is one of these, and it can appeal to segments like Gen Z and the unbanked, both of which are more price sensitive. The major retailers have already rolled out BNPL options; some have been in play since 2019. BNPL can affect pricing, so it’s important to monitor this. With Line Item, you can verify item pricing, selling price, and list price across platforms, ensuring that products are priced correctly even with new options like BNPL, and you can easily monitor third-party and competitor activity to protect your brand and products.

Of course, there are other strategies to consider, too—best practices like:

-Ensuring your checkout process is as easy as possible

-Providing access to customer service with tools like live chat, and with quick responses

-Creating engaging content, like gift guides

-Using targeting and segmentation to create personalized email campaigns

-Boosting sales with savvy retargeting

Using updated visuals and copy for featured holiday campaigns, and to ensure your site and product pages have that holiday look and feel, and more

This holiday season may be full of surprises, but your performance shouldn’t be one of them. The right insight can make or break your brand this holiday season, and business intelligence can give you what you need, when you need it. This is where Line Item really stands out as a single platform with insight into shopping trends and behavior, and what your competitors are doing—so you can finish 2021 in the black.