Retailers can’t afford to discount the customer experience this December

Welcome to December and the chance for retailers to redeem themselves with customers.

Historically, the highest retail sales and earnings were generated in December in the weeks leading to Christmas and the following Boxing Day sales.

In recent years, December sales have been eclipsed by November on the back of the Black Friday and Cyber Monday sales that are now effectively stretching over a fortnight with presales and extended sales.

The Australian Retailers Association and the research firm Roy Morgan predicted retail sales of $6.36 billion for the four day event this year marginally above the predictions ahead of both the 2021 and 2022 events.

The 2024 prediction was somewhat bearish given that the National Australia Bank reported the actual sales for the four-day Black Friday and Cyber Monday shopping event were estimated at $7.1 billion.

This year’s sales results will reflect broader participation by retailers online and in stores as well as inflation but conversely may have been constrained by cost-of-living pressures and retailers cleaning inventory after a difficult September quarter.

Confirming the cost-of-living impact on retail spending attitudes this year, the latest Westpac Bank consumer confidence monitor shows Australians are as pessimistic currently as they were at the height of the Covid-19 pandemic and the global financial crisis of 2008.

Short-term gain for long-term pain?

Whatever the final sales outcome (and profit contribution) in Australia this year, the Black Friday/Cyber Monday sale is a huge retail event that has eclipsed the Boxing Day/New Year sales.

A welcome and timely boost for retailers, the Black Friday and Cyber Monday sales are expected to account for more than 25 per cent of all holiday purchases.

It is exciting and, perhaps more this year than any other, provides welcome discounts to cheer otherwise gloomy consumers shaken by economic tremors, including rises in interest rates and non discretionary cost of living increases.

But there is a question about whether or not, the Black Friday/Cyber Monday sales could represent short-term gain for long-term pain, especially for bricks-and-mortar retailers.

I don’t want to be like The Grinch who was not a fan of Christmas, but simply contend there is an inherent problem in the compaction of such a high proportion of sales into such a short period of time.

Great to have the dollars ringing in the registers, but what is the impact of the chaotic and, for so many, frustrating, mega event on customer experience?

Does the adrenaline rush overpower the exasperation of traffic blockages, parking hassles, interminable queues and irritable staff and fellow shoppers?

This event is really shopping for the intrepid and for most, even with the reward of bargain gifts for the festive season, not a pleasant let alone fun experience.

The Westpac bank certainly expects Christmas 2023 to be leaner in terms of retail spending overall with the boost of the Black Friday/Cyber Monday event unlikely to change consumer intentions to spend less for December than they did last year.

A recent survey with 2000 respondents by Emarsys indicates 60 per cent of shoppers in Australia claim they are prioritising cost over brand loyalty, and 23 per cent don’t feel they can afford to be loyal anymore.

With cost pressures so acute for consumers along with concerns about their financial position in the months ahead, a poor, frustrating or unsatisfying experience in the frenzied Christmas shopping period can be a deal breaker on brand loyalty.

Cheap prices won’t offset a bad shopping experience

The prevailing economic conditions and consumer mood have amplified the appetite for promotions and discounts but the shopping experience itself is crucial to the longer-term customer relationship.

The old premise that a sale is a temporary gain but the objective should be to impress the customer with the shopping experience and encourage repeat custom, to develop brand loyalty.

Even in the midst of a major promotion or discount event, the objective of retailers should be to optimise the customer experience and to provide an incentive for return visits.

An example of the importance of the experience is in restaurants. You can have best the food but a return guest visit is unlikely if the hospitality, the service and ambience was poor.

Cheap prices will not necessarily offset an unsatisfying shopping experience and poor customer engagement, let alone service.

To me, the person coming into a store who doesn’t make a purchase is as important as the one that does buy because understanding why no purchase was made can help to improve the business.

It is surprising how staff in so many stores fail to engage with customers even when there is no-one else browsing or being served in the store.

“Can I help you” may be a tired introduction but actually engaging with customers, eye contact and a smile are more important to customer experience than all the technology and design elements of stores.

The technology and design might attract attention and even an immediate sale but the thing that can create a long term customer is the staff engagement.

Imagine being greeted by “welcome to our store” or if the fulfilment of a website order included the name of a staff member with a personalised message or an invitation amid the chaos of a promotional event to return to the store or website for a more pampered experience or offer.

Welcome to December and the opportunity to show customers and potential customers some love and Christmas cheer.

The post Retailers can’t afford to discount the customer experience this December appeared first on Inside Retail Australia.