Strategies for success: LSKD and Shippit on preparing for peak season

Peak period is just around the corner. Industry leaders and experts discuss how brands should consider in advance of the sales event.

The post Strategies for success: LSKD and Shippit on preparing for peak season appeared first on Inside Retail.

The end-of-year peak period is a critical time for the retail industry. The weeks leading up to Christmas, Cyber Monday, and Black Friday typically see a surge in promotional activity that can account for a significant portion of a brand’s annual revenue.

However, this year poses both challenges and opportunities for retailers as they prepare for end-of-year sales events. The macroeconomic landscape is particularly challenging, characterised by high inflation and intense cost-of-living pressures. As a result, many consumers are expected to postpone discretionary purchases until peak season, where they are more likely to find sales and discounts. 

Meanwhile, consumers hard hit by economic challenges might hold off on discretionary purchases all together due to financial constraints. In this environment, retailers need to be strategic in how they capture consumer attention and drive sales.

With many retailers already starting to plan and prepare their inventory levels, pricing, promotions and everything else ahead of peak period, we spoke with a number of industry experts to find out what they should keep in mind.

 Listening to the community

When it comes to Black Friday, rapidly expanding Australian sportswear brand LSKD are a major player. Last year, the brand offered up to 70 per cent off certain products between 21 and 30 November, and recruited 175 new team members for its fulfilment centre ahead of peak period.

LSKD founder and CEO Jason Daniel said that the brand spends a lot of the year planning and preparing for peak period. This to ensure that there’s sufficient hype and energy surrounding its promotions, and that it’s able to scale its operations to meet demand.

He added that the brand is forecasting a 50 per cent increase over the November and December period compared to 2022, with its retail network of eight stores – up from two last year – contributing to this growth. 

Daniel explained that it will employ more than 150 additional team members ahead of this year’s peak period. 

He also noted that the brand doesn’t discount very often – choosing to lean into Black Friday as its biggest promotion.

“We know our community waits for our Black Friday sale each year because we provide great deals and lots of products for them to try risk free with our free and easy returns process,” he said. 

How LSKD prepares

LSKD head of operations Murilo Fabri outlined a number of steps the brand takes ahead of peak season to prepare its stock and inventory levels so as to avoid potential disruptions.

They include: 

• Ensuring it has the right amount of stock and styles to meet demand

• Conducting a full review of IT systems to make sure the tech stack can handle expected volumes

• Rolling out a recruitment campaign to engage and onboard hundreds of new casual team members who are aligned to mission and values

• Providing training and development for new and existing casual team members, and giving key experience members new roles as ‘cluster leaders’ to support seasonal staff during the peak period

•  Reviewing infrastructure and IT resources

•  Completing a process review to identify and implement efficiencies

• Revisiting the distribution centre’s operating hours to ensure the facility is used as efficiently as possible during the period. During Black Friday last year, the LSKD team operated for 24 hours during the first week of the sale, so it could get community orders dispatched and to doorsteps as quickly as possible.

Deal sensitivity

Rob Hango-Zada, co-founder and joint CEO of shipping platform Shippit, explained that peak season has become an even bigger event in the Australian retail calendar, due to the rise of Black Friday and Cyber Monday sales, as spearheaded by online and omnichannel retailers. 

Hango-Zada is predicting this year’s peak season will be “another big one”. While there has been some softening of online sales due to cost of living pressures, and the lag effect from interest rate hikes, he believes there’s still an appetite to spend on good deals and sales.

“We’re seeing more resilience from brands with every-day and low-price strategies. Think about Kmart, Aldi and other brands who are known for being quite reliable with their low prices,” he said. 

“This creates almost the perfect atmosphere for Amazon to succeed during [peak period].”

Discerning customers

Hango-Zada cited data which showed that Australians made about 27 per cent more orders during the Black Friday and Cyber Monday period in 2022, compared to the previous year.

He noted that many consumers are now waiting for sales events before they spend money on discretionary items, so retailers should consider using this time to attract new shoppers who might otherwise not consider engaging or spending with their brand. 

“What we know is that today’s online shopper is more discerning. If there’s a delay in their delivery experience, it becomes a key point of friction for them moving forward,” he said.

“We’re encouraging retailers to really think about their capacity to deliver to the expectations of that [first-time] customer.”

And, while getting inventory into the country has been a significant challenge over the last few years, Hango-Zada explained that shipping and freight costs are back to pre-Covid-19 levels, with delivery times more reliable than in previous years.

However, recent declines in consumer spending mean that many retailers are struggling with excess inventory, and need to be smart about how they manage their stock.

Shoring up local demand

Another important consideration, according to Hango-Zada, is staff availability and shift times across warehouse distribution centres. 

He noted that Australian retailers tend to run fulfilment within normal business hours, while companies like Amazon operate on a 24/7 basis. Hango-Zada stressed the importance of delivery times in attracting and retaining customers. 

“People are quite well educated in buying online now, and they are well-versed with delivery delays, but less tolerant of it. So much so that customers are shifting where they’re buying from as they don’t have the patience to wait two weeks when buying from overseas. They’re trying to find local retailers who might have the same proposition,” he said. 

“I think it’s a good opportunity for retailers who are competing with offshore brands to shore up local demand by clearly communicating their delivery timelines.”

Sacrificing margin

Meanwhile, Daniel emphasised the fact that LSKD’s customers inform the brand on the areas it should invest in which, in turn, leads to increased demand, particularly during peak periods. 

“We sacrifice some margin to ensure [our customers] have a great experience and are inspired to ‘chase the vibe’ when they try our product,” Daniel said, referring to the brand’s slogan.

“If we continue to do that well and invest in our community experience, [it] helps us build a sustainable and profitable business. 

“We can then reinvest those profits into making our product better and continuing to provide free returns, as well as fast fulfilment and shipping.”

The post Strategies for success: LSKD and Shippit on preparing for peak season appeared first on Inside Retail.