How Retailers Can Get Ahead

While most shoppers are still hanging on to the memories of Summer, retailers are already gearing up for that most critical time of the year: the holidays.

This year, however, they face a unique set of challenges that will test their adaptability, resilience, and innovation to the fullest.

Above all, they must contend with the fact that consumers are still feeling the squeeze in their personal finances.

Accenture’s
ACN
recent Consumer research found the overwhelming majority of shoppers saying they’re not only feeling intense levels of uncertainty, but expecting it to endure for the foreseeable future.

That will feed into purchasing decisions. And it’s not the only headwind on the horizon for retailers.

Choppy waters ahead

Let’s not forget that, in the United States, student loans will come back into play this fall after three years of suspended interest accumulation. This will have an impact on the disposable income levels of those consumers who are affected.

And what about other COVID assistance programs that have also come to an end? Take emergency SNAP payments, which played a significant role in supporting low-income households during the pandemic.

There’s evidence the withdrawal of these payments has increased food insufficiency among former recipients. That’s concerning. And the effect will ripple through to retailers, particularly those in the grocery sector.

Agility: even more essential

With consumer sentiment likely to remain uncertain and volatile, retailers will need to display ever greater levels of agility and responsiveness as they navigate challenging headwinds.

That includes being able to fine-tune strategies on the fly and adapt industry-proven best practices in real time as circumstances evolve.

Agile marketing and sales plans will be more important than ever. Retailers will need to excite and engage shoppers through the full breadth of channels, as they do every holiday season. But they’ll also need to adapt their campaigns and plans quickly.

Gen AI steps up

Then there’s new and emerging technologies such as artificial intelligence, especially generative AI, that is poised to be a game-changer in delivering that agility. The technology continues to advance rapidly. And marketing is one of the first areas to see the benefit.

With its ability to analyze vast amounts of data, identify emerging trends, and generate highly relevant content at scale, generative AI allows marketers to streamline the creation of highly personalized and engaging campaigns at an unprecedented level.

Examples include auto-generating product descriptions, producing email and web content tailored to particular consumers, or even generating captivating visuals on demand.

Where it gets even more interesting is generative AI’s ability to adapt this content in real-time. That allows marketers to respond dynamically based on the insights the business is generating from emerging consumer trends and shifts in shopping behavior.

Intelligent pricing

Another agile tool retailers now have up their sleeve is intelligent or dynamic pricing. Using advanced data analytics, including artificial intelligence, retailers can analyze a whole range of customer and market data and use the results to adjust pricing models in real time.

Examples might include lowering prices for one product to entice cash-strapped consumers to make a purchase, while increasing prices for another where the market signals suggest high levels of demand.

Intelligent pricing is a powerful capability that allows retailers to be more responsive to fluctuations in consumer behavior and market trends over the holiday season and beyond. It also helps them strike a delicate balance between driving sales growth, protecting margins and meeting consumer expectations.

In fact, research from Accenture has found the technique can help boost revenues by up to 15% overall.

Investing in agility

Like AI-powered marketing, intelligent pricing reinforces the imperative for retailers to keep investing in their digital core — to ensure they have a mature and agile data and AI foundation capable of delivering real-time insights.

But the need for data-driven agility extends much further. In the store strategy, for instance, retailers should be looking to revisit layouts and assortments to account for changes in local shopping habits and expectations.

In workforce management, too, they need agile talent strategies to ensure they have a well-prepared, knowledgeable, motivated, tech-savvy workforce to manage extra demand during the holiday peak.

And in customer loyalty – which is all the more important in periods of economic uncertainty – they must be willing to rethink the tried and tested strategies of the past, refocusing around a more nuanced, data-driven understanding of consumer needs and desires.

A good example is how 1800-Flowers shifted their loyalty focus from points for purchases to brand engagement. Customers now earn rewards for product reviews, answering fellow shoppers’ queries, and engaging with the brand beyond transactions. Another example is Lululemon. The athletic apparel retailer introduced two tiers of membership in a bid to create build a stronger base of loyal customers. The offerings come with exclusive access to items, events, and fitness classes.

Ensuring a happy holiday for all

With the holidays fast approaching, retailers will need to call on all these capabilities to deliver a happy and profitable season.

It’s why those that have already invested in a solid data foundation and flexible digital core – which is a digital representation of their company that brings together all the applications, services, and data via the cloud – will have a critical advantage over their peers. Especially when it comes to tapping into the remarkable potential of generative AI.

For the rest, it’s never too late to get started. Investing in technology-enabled agility is now a critical requirement for retail success, whatever the season.