Going beyond just holding massive sales at deep discounts.
2020’s holiday shopping season sales were catastrophically different. Consumer spending had been a bright spot amid the sagging pandemic economy, and yet the end of last year saw sales fall more than economists expected. While questions remain about the relative stability of the broader economy, even bigger issues remain for on-the-ground retailer logistics as mountains of overstock continues to pile up. The months of COVID-19 lockdowns and restrictions begs the question: as retailers begin to open up, how do they work to get rid of it?
Ecommerce has made balance sheets look fairly good over these months, with this major turnaround factor allowing customers to continue to engage from the comfort of their own homes. But the supply chain restrictions and excess inventory tell another story.
Unsold, out-of-season goods and apparel are something like a retailer’s pre-pandemic time machine — items from lost sales in the early-to-mid part of last year are driving the value of inventory downward. Gone is the glut of consumer culture days where brands could afford to destroy unsold merchandise. Instead of continuing to take up storage and dollars, brands will need to think smarter to move products as vaccines become more available and storefronts regularly open up.
The obvious main option here is for these brands to simply hold massive sales at deep discounts. They could retain customers and drive consistent demand for newer stock by offering big deals on the so-called outdated merchandise. But if the restrictions and uncertainties of COVID-19 have taught business leaders anything, it’s that foundational solutions like moving excess inventory shouldn’t be that scattershot.
Just as it was in the early pandemic days of April and May 2020, it’s clear that a possible short-term gain is more than offset by long-term problems. So discounting on inventory needs to be smarter, now more than ever.
This isn’t about not discounting. This is about optimizing a brand’s situation through targeted sales and preserving profit in the long-term.
Being smarter involves transitioning from one-size-fits-all marketing efforts into incorporating AI-based methodologies across consumer segments with various engagement levels. Delivering personalized promotions on overstock, based on an individual's previous buying behavior, is more likely to drive conversions no matter what the items are. By being able to pinpoint the buyers that will continue to engage, especially at the lowest offer amount needed to convert, every dollar of a brand’s promotional budget works that much harder to boost sales.
This year is still very uncontrollable economically. By shifting the discounting POV on their excess inventory, retailers can actually personalize, revise, and implement more precise discounts in real-time, ultimately saving money. While slashing prices may convince shoppers to spend fast for a moment on general merchandise, eliminating overstock hinges on a brand’s ability to identify which consumer will make a purchase.
Interested in learning more? We would love to help with your promotional marketing needs. Learn how RevTrax's solutions can help your brand eliminate overstock by speaking with a specialist today.