The holidays are the most important time of the year for retailers as well as most shoppers. But greater competition between retailers, a still-recovering economy, and price-conscious customers with less disposable income are likely to make the 2015 holiday retail season particularly challenging.
According to the National Retail Federation’s Holiday Consumer Spending Survey, U.S. retail sales in the months of November and December will likely increase by a solid 3.7 percent, totaling $630.5 billion. This year, consumers celebrating Christmas, Hanukkah, and Kwanzaa will spend on average $805.65 on food items, decorations, and gifts, the highest amount in the survey’s 14-year history and in line with last year’s average spending of $802.45.
“Despite the challenges that still exist in our economy, it looks as if customers are eager to celebrate the holidays with friends and family this year,” says NRF President and CEO Matthew Shay. “We expect consumers will tackle their holiday shopping lists with a healthy dose of optimism, tempered by a hint of caution as they look for ways to find the perfect, practical gift.”
Consumers are Cautiously Optimistic
Shay notes that retailers will be enticing buyers with exclusive incentives, efficiency, price matching, and always-popular free shipping and buy-online/pick up-in store offers. At the same time, economic concerns are still likely to impact how, where, when, and why people shop over the holiday season. According to Shay, “Consumers still have the weight of the economy on their minds” which has created “the complex retail-spending environment we are seeing right now. We expect families to spend prudently and deliberately.”
This means competition between retailers this holiday season will be fierce. Most reports suggest that consumer confidence will remain low this year as most families continue to have less disposable income than they’ve had in the past. Retailers looking to please money-conscious customers - and keep them coming back all year round - will need to focus on creating memorable customer experiences to engage shoppers who will be, according to the NRF report, increasingly savvy and specific about which businesses they shop with in the final two months of the year.
Don’t Be a Grinch this Holiday Season
So, just how important is customer satisfaction this holiday?
- 66% of consumers switched to a different business at some point in the year due to poor customer service. (Accenture)
- 86% said they would actually pay more (up to 25% more) for a better experience. (Forbes)
- 75% of customers said they have spent more money with a company based on a history of positive customer service experiences. (American Express)
The bottom line is that customers will go elsewhere if a business is unable to provide a high level of service and value so, clearly, customer care must be a priority this holiday season. Retailers offering both discounts and distinct, personalized service stand a better chance of rising above the crowd. As Shay points out, today’s customers are “more savvy and sophisticated than ever before. The recession had a tremendous impact on how consumers shop… They have a few more dollars in their wallets, but that doesn’t mean they aren’t going to be smart about where and when they spend.”
Delivering Customer Satisfaction
Given how discerning today’s customer is, businesses will need to provide bigger and better support, using this holiday shopping season to build loyalty and boost success in the year to come. To do this, retailers will have to shape their services and approach around the purchasing habits of a time, price, and quality-conscious consumer. After all, these days brand loyalty cannot be taken for granted. Today’s post-recession holiday shopper is on the lookout for the best return on investment. Where they find the best deal is less important than the service they receive while shopping.
Much of this may seem like common business sense but, this holiday season, American retailers will continue to do business against the backdrop of an uncertain economic environment. Proper planning will help a business capitalize on the opportunities that do exist, which could make all the difference. Providing customers with an experience that they won’t find elsewhere is a good place to begin. Delivering an exceptional experience doesn’t have to mean suddenly offering price reductions to undercut the competition. Instead, it can be delivered through highly personalized, multichannel marketing, or by encouraging feedback that may help lead to beneficial changes in products or services, solutions available to even the smallest businesses.