Retailers need to get creative in 2014 to avoid repeat of poor Christmas sales, experts warn

By Chris Lee

In accordance with tradition, online sales increased again in December 2013, breaking more records. However, for many retailers who rely on both on- and offline sales, Christmas 2013 was disappointing.

New Media Knowledge spoke to two leading online marketers to understand where retailers could improve going forward.

Don’t blame bad weather

While it may be tempting to blame a stormy December for poor sales performance, this no excuse in the eyes of Dan Cohen of online merchant network Tradedoubler.

“The news that retailers struggled during the Christmas period due to bad weather comes as no surprise, and is a recurring problem for the high street. However, bad weather shouldn’t even factor into sales performance,” he argued. “The issue of bad weather affecting performance can be rectified if retailers adopt a multi-channel approach to future proof their business.”

Through integrating their on- and offline ecosystems, stores could see considerable benefits, Cohen believes, citing the success of department store John Lewis this Christmas.

Voucher codes offer opportunities

Cohen argues that voucher codes are the current bridge between the online and offline world, increasing sales not only online, but also boosting footfall to the retailers’ physical stores. Research from Tradedoubler conducted last year found that 44 per cent of consumers use a voucher code on their mobile phone when shopping on the high street.

“By offering online vouchers, businesses can provide a mechanism for consumers to find the deal they want and transact immediately, increasing in-store sales. It also works to increase online sales too, as consumers can search for codes or discounts having been to the physical store,” Cohen told NMK.

The major advantage of voucher code use, from a retailer’s perspective, is that they are flexible both on- and offline, and that consumers can use them regardless of adverse weather conditions, Cohen argued.

“All retailers should be considering bolstering the relationship between their traditional bricks and mortar stores and their online offering, particularly if they want to survive in today’s harsh retail environment,” he concluded.

Discounting alone is not enough

For Gideon Lask, CEO of social selling technology company Buyapowa, the big winners in Christmas 2013 were those retailers who are “unafraid to take risks”. Lask also cited John Lewis, alongside Next, Ryman and Robert Dyas, all of whom resisted across-the-board discounting in the pre-Christmas period and all enjoyed excellent seasonal sales. The retailers who struggled, in his view, are the ones who “clung to the old retail tactics which simply don’t cut it anymore”.

Lask believes that generic discounting, in particular, has definitely reached its sell-by date.

“Retail has become addicted to slashing prices in a desperate attempt to grab attention,” Lask told NMK. “But, when everyone’s playing the same game, discounting just becomes background noise to the consumer. In fact, any real cut-through requires margin-obliterating cuts of 80 per cent or more; even then, retailers will simply have attracted deal-hunters with no loyalty to their brand and no incentive to shop with them again.”

Lask believes there is another way. Tesco and Argos have been pioneering a modern alternative to discounting called ‘smart rewards’. Instead of slashing prices from the outset, they incentivise customers to earn their rewards by referring friends, sharing via social media or providing valuable insight for the retailers’ trading teams.

“It’s a you-scratch-my-back-I’ll-scratch-yours model and it’s something customers actually respect, a mile removed from the old-fashioned and increasingly tawdry tactics employed by the oil-tankers of yesterday’s high street,” Lask concluded. “It is these forward-looking retailers who can look forward to healthy results and exciting times in the year ahead.”

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