As the legend goes, three spirits visit Ebenezer Scrooge one Christmas Eve to offer him new perspective on the past, the present, and the sort of future his selfish actions might bring. After each ghost spends time with the icy Scrooge, he wakes up with a melted heart and an entirely new outlook on the holiday season and his role in other peoples’ lives. As we regroup after this most recent Christmas season, with worrying sales figures from many high street stalwarts, one wonders if retailers are waking up from the sort of dream Charles Dickens described in A Christmas Carol so many years ago.
A recent story in the Wall Street Journal points out that retailers, while trying to resist it, have looked to employ deep discounting to flush out inventories and to capture customers this holiday season. The same retailers who have been scrambling to keep up with customer demands and the shifting sands of the connected age.
The effects were more pronounced than ever this holiday season, as retailers struggled to get started right out of the gate. On Black Friday retailers scrambled to allure customers to both their brick and mortar stores as well as their ecommerce sites. Clearly retailers still haven’t figured out the best mix of what to discount and when to hold the line. They still struggle with the notion that the ghosts of retail past are exactly that: the past.
Consumers have become accustomed – and in many cases expect – discounts to take place early and often at retail. We’ve taught them to believe there is always another sale around the corner. Why would the major gift giving season of December change this mentality? If everyone is discounting… is there even such a thing as full price anymore?
Consumers expect discounts, and businesses will have to provide them. The question comes down to how retailers can become savvier with those discounts. Follow the Jet.com model – provide discounts but some caveats such as non-returnable or debit card purchase only. Or rather than simply discounting one product, bundle items together to offer more savings – some commentary cites the example of discounting at Ralph Lauren on a scarf that is only available by bundling it with gloves? This discount the bundle but looks to capture a higher amount of revenue on the whole.
Amidst this uncertainty, retailers must lean on their supply chain network for greater nimbleness. The ghosts of Christmas past never had to deal with such new fulfillment models as deliver-to-home, order online, and deliver-to-store. Add these to the traditional brick and mortar distribution methods and businesses are staring down a mess of new complexity to solve the age-old problem of getting a product into a consumer’s hands.
A retailer’s ability to position inventory, respond to demand, and fulfill more effectively is vital. As consumers expect more from their experience, retailers need to keep pace. The supply chain is the best way of doing so.
No one wants a visit from ghosts, especially around the holiday season(s). But consumer demands can be fickle, and discounting loses meaning when everyone’s doing the same thing, all the time. If retailers continue to ignore the underlying challenges within their supply chains, the spectre of lost sales, disappointed customers and decreasing revenue will continue to haunt them for years to come. When retailers have pricing under control, the ghost of Christmas past remains exactly that – the past.
