With Black Friday and Cyber Monday quickly approaching, many retailers are counting on a major revenue boost… or are they? Coveo’s annual holiday shopping report investigated what retailers are currently expecting from the year’s busiest shopping season. The research team also did some digging into whether there are certain holiday campaign strategies that are likely to be more successful than others for capitalising on the hubbub and holiday consumer demand.
To understand these nuances, and other others too, Coveo and partner RSR Research designed a survey for retail decision-makers, which was then conducted with respondents representing 92 retailers (97% of which have revenues of $250M+). The findings were revealing, especially when looking at a side-by-side comparison of responses of retailers experiencing faster-than-average growth versus slower growth.
Holiday peaks still an important revenue driver
First and foremost, let’s answer the question: do retailers still rely on Black Friday and Cyber Monday to move from the red to the black? The answer is complicated. It depends on if they are getting it right! Overall, 58% of retailers surveyed strongly believe that holiday events are still a powerful source of revenue. However, this figure rises to 76% when focusing solely on the above-average performers within the same group and drops down dramatically to 24% when just surveying the underperforming segment. This is because top retail performers are being more strategic with how they approach relevant and personalised offers, timing of inventory sell-through, and being proactive about their technology decisions.
Specifically, the research team found four key differences that show the distinct divide between top retail performers versus the underperformers:
· Getting the basics right is critical during holiday peaks. More than 50% of high-performing retailers tout the importance of easy returns, price or product availability, and social proof badging. Also, 55% of high performers say they expect to shift more than 41% of their sales value towards online shopping and fulfilment during Black Friday. For comparison, only 32% of underperformers report doing the same.
· High-performing retailers have differing goals for holiday promotions with 60% wanting to increase average transaction values as compared to 35% for lower-performing retailers. Top performers also sell-through inventory before products reach end-of-cycle (60%). On the flip side, 62% of lower-performing retailers are focused on getting rid of surplus merchandise, while only 48% of top-performing retailers listed this as a holiday promotion strategy.
· High-performing retailers are fine-tuning loyalty-building experiences. Nearly two-thirds of high performers, as opposed to 35% of average/underperformers, are extending the return period during the holiday season. Winners (62%) are changing online search categories to make discoverability easier for shoppers such as “gifts for dads”, compared to only 41% of underperformers. And winners (66%) are using search engines to boost products right on the product listing pages.
· When it comes to technology, planning is key. More than half (52%) of retailers say they will have implemented generative AI in their contact centre. Similarly, 52% will have implemented some automated capabilities in anticipation of increased call centre volume this holiday season. Above-average performers are at least twice as likely to proactively engage IT with a formal SLA (service level agreement) for higher traffic and volume support during the holiday season. Furthermore, 32% of retailers say they are experimenting with GenAI capabilities now, possibly for implementation in the short term.
Overall, the vast majority of retailers agree that shoppers will continue to take advantage of special event promotions using personalisation to increase profitability. In fact, 90% of respondents say that hyper-personalised offers are already happening, moving from a “nice-to-have” to a “must-have” capability. Furthermore, 90% report that hyper-personalisation will end industry-wide special sales events as we know them within the next three years. Finally, 70% say they will spend less on mass market promotions but expect to achieve greater sales through personalised offers over the next two years.The full report is available for download here.