New Report Highlights Critical Pricing, Promotions, and Marketing Challenges Amid Economic and Market Pressures
First Insight, a leader in predictive analytics and Voice of Customer (VoC) solutions, has released its latest report, “Retailers’ Blind Spot for Holiday 2024”. The report highlights the critical uncertainties retailers face as they prepare for the upcoming holiday season, emphasizing the need for integrating predictive analytics with consumer insights to optimize pricing, promotions, and marketing strategies.
“By focusing on customer insights and integrating AI-driven predictive analytics, they can focus their sights on where they’re going, and not where they have been.”
The report, based on a May 2024 survey of U.S. retail decision-makers, reveals that retailers are grappling with concerns about promotional effectiveness, inventory levels, and customer acquisition and retention. The top concerns identified include:
- Promotional Strategies: Retailers are uncertain whether their promotional strategies will be too reactive rather than strategic.
- Inventory Management: There is a significant worry about having stocked enough of the right merchandise.
- Customer Alignment: Retailers are not confident that their planned assortments will resonate with target consumers.
“With rising inflation costs, retailers have much to worry about, especially whether the products they bought will be what consumers are willing to spend their money on,” said Greg Petro, Chief Executive Officer, First Insight. “This makes it imperative for retailers to ensure their offerings align with consumer expectations.”
Retailers cited their top data and insight sources, the top three of which were either backward-looking or derived from third-party data. More than half (53%) use previous seasons’ sales histories, 49% use trend services and reports, and 42% rely on customer comments and reviews from their websites.
The report also highlights the external pressures facing retailers, such as the impact of inflation on consumer spending and the competitive threat from online marketplaces, like TikTok Shop. With inflation cited as the number one external concern, retailers are wary of its potential to reduce consumer discretionary spending on gifts and other holiday-related purchases.
Key Findings from the Report:
- Inflation Concerns: 81% of respondents stated that rising prices for essentials like groceries and gas would negatively impact consumer spending on discretionary items.
- Promotional Timing and Depth: Retailers are struggling with the timing and depth of markdowns, which are crucial for attracting consumers while maintaining margins.
- Customer Acquisition and Retention: Attracting new customers and maintaining loyalty among existing ones remain significant challenges.
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Voice of Customer Insights
One of the report’s significant insights is the misalignment between marketing and merchandising teams. Often operating in silos, these teams struggle to synchronize their strategies, leading to ineffective promotions and mismatched inventory levels. By sharing consumer insights on pre-season items, customer-valued products, and initial pricing expectations, both teams can better align their efforts for success. First Insight’s report suggests that by coupling VoC data with AI and predictive analytics, retailers can move from a reactive to a proactive stance.
“Preparing for this upcoming holiday season presents a pivotal opportunity for retailers to rethink their strategies for future seasons,” added Petro. “By focusing on customer insights and integrating AI-driven predictive analytics, they can focus their sights on where they’re going, and not where they have been.”