Holiday outlook GuideCross-CHannel ConsistenCy, Mobile inteGration are keys to suCCess

IntroductIon

MobIle: RETAILERS AND CONSUMERS MOBILIZE FOR THE HOLIDAYS

SocIal: BUILDINg SOCIAL COMMUNITIES THAT SpREAD HOLIDAY CHEER

MarketIng: MIx IT Up wITH MARkETINg AND pROMOTIONS TO DELIvER HOLIDAY SUCCESS

the prIce warS: COMpETINg BEYOND pRICE TO wIN HOLIDAY SALES

loyalty: BRINgINg CHEER TO LOYAL CUSTOMERS DURINg THE HOLIDAYS

plannIng and forecaStIng: THE FOUNDATION OF HOLIDAY SUCCESS

perSonalIzatIon: SHININg A SpOTLIgHT ON SHOppERS

localIzatIon: HOLIDAY SHOppERS RESpOND TO LOCALIZED OFFERS

about retaIl touchpoIntS

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Industry experts are predicting some of the traditionally popular retailers, such

as Nordstrom, will perform well again in the 2012 holiday season, but they also

are watching some innovative moves from other retailers. “I’m pretty bullish

on Nordstrom at the moment,” noted paula Rosenblum, Analyst partner, Retail

Systems Research (RSR). “The company resisted any urges to start promoting the

holidays before Thanksgiving, and has been very good at managing inventory,

while recording great same store sales and earnings.”

“Sephora had a great number of unique items for the holidays last year,” noted

Crames. “I also believe Macy’s created and sustained excitement (last year),

unveiling deals over time. And Best Buy and Walmart drove tremendous traffic

through door busters.”

Retailers committed to cross-channel consistency also are receiving high marks. “A

few retailers are doing a very good job,” Rosenblum said. “I think JCpenney was

doing well even before the Johnson era (new CEO). REI is a legend in this regard.”

Asked for one important piece of advice for retailers, Rosenblum said: “Don’t make

promises you can’t keep. If your web site tells the consumer the product is in-stock

in the store, or doesn’t explicitly say it isn’t, then the product better be there.”

The buzzwords for the holidays are similar to what retailers are hearing year-round in today’s

marketplace: customer service, cloud, cross-channel, social and mobile. But how these tactics

are implemented as part of holiday strategies can make or break the season for many merchants.

“The big realization that many brick-and-mortar retailers have come to (many belatedly) is that

the cloud and the store are not separate checkouts,” noted gary Schwartz, president, Impact

Mobile. “The consumer is checkout agnostic. The consumer is channel agnostic. To succeed in

the 2012 holiday shopping season, retailers need to use mobile to engage in store and move

the shopper into their cloud or engage in the cloud and drive door-swing. If the retailer cannot

effectively clientele using mobile in the store, if the retailer cannot capture the mobile number

opt-in at pOS, their shopper will be poached by Amazon or, worse yet, simply abandon intent.”

The fast-moving social media environment also will take retailers for a ride during the holidays.

“given how quickly social media has been adopted, how many channels are popping up,

seemingly daily, we believe the opportunities for retailers will increase this year, along with the

competition for consumers’ attention,” noted Michelle Crames, Founder and CEO, SkuLoop.

introduCtion

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In a presidential election year, holiday revenue is affected

by the campaigns and the outcome. “I expect holiday

sales to be up 3% to 4%,” noted greg Buzek, president of

IHL group. “But it will likely be the higher level if Romney

wins the general election, the lower if Obama wins. An

interesting component to all of this is what happens during

the lame duck session of Congress. There are a lot of huge

tax components that expire at the end of 2012 and will likely

not be dealt with until the elections. The expiration of the

Bush Tax cuts will have a big impact on spending; the lack

of long-term AMT tax will also have an effect. This could go

either way based on what happens in early November.”

Consumers have put the pressure on retailers to prepare for the mobile

revolution. Some staggering statistics confirm that mobile is the place to be.

On Christmas Day 2011, for example, consumers increased mobile shopping

by 173% over the previous year, according to the study titled: Google Post

Holiday 2011 Takeaways. Additionally, 12% of online visits to a retailer’s web

site came from a mobile device during the 2011 holidays, a 5% year-over-

year increase.

Mobile has a few distinct meanings when it comes to retail: mobile

commerce and mobile payment are making the most noise, as the

increasing number of smartphone owners express their desire to shop and

buy via their mobile devices. In-store, retailers are arming their associates

with both smartphones and tablets in order to save and boost sales by

providing a better customer experience.

“More of Christmas 2012 will be rung up on mobile devices,” noted Buzek,

“and retailers are scrambling to get their tablets and mobile devices

ready. There is a great desire to get there

in time. It will be interesting to see what

happens with lines: will it be mass chaos,

where it looks like a museum with tour

guides as groups of people flock and follow

particular sales personnel?”

“Mobile commerce will be showing the

biggest year-over-year growth of any

channel,” added Larry Freed, president of

ForeSee Results. “we expect it to at least

double from last season. However, its biggest impact will come not only from

its role as a revenue stream but additionally as a companion channel for

store shoppers. Customers will be trolling the aisles of their favorite stores while

looking at their phones; they’ll either be looking at that store’s app or mobile

site for that retailer’s product and pricing information, or at a competitor’s.”

But while scrambling to prepare for the holiday rush, retailers must be

careful to maintain their consistent brand message when launching

mobile strategies. “Many retailers are struggling with a consistent brand

experience, especially in the mobile environment,” noted Lynly Schambers-

Lenox, group product Marketing Manager, Digital publishing at Adobe.

“Mobile marketing professionals need to understand the emerging roll of

a tablet application and how it can reflect and enhance a brand while

building a bridge across other retail channels. And, yes, this is very important

for the upcoming holiday season when consumers are bombarded with

messages from a variety of brands.”

Industry experts agree that mobile likely will be the differentiator between

retail winners and losers during the 2012 holiday season. “Consumers will

expect a higher level of engagement via mobile this holiday season,” noted

Simon Salt, CEO of International IncSlingers, “so all strategies should include

ways for consumers to interact with the brand via this medium — whether via

QR codes that provide additional product information, apps that allow faster

checkouts, Augmented Reality to extend the environmental experience for

the consumer, or SMS campaigns to provide timely and relevant offers. Brands

that execute well will find a much higher level of engagement with their

customers and prospective customers.”

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Mobile Payment:

while providers are scrambling to develop and implement mobile payment solutions, the technology is only slowly making inroads in the U.S. Retailers that

offer an easy-to-use mobile payment solution in time for the 2012 holidays will have a long leg up on the competition. “If consumers’ phones have the

capability to provide them with a seamless checkout experience, they’ll expect it to be leveraged by their favorite brands,” noted Salt. “If it is not, a new

favorite will be found.”

Some recent mobile payment implementations that have seen significant success include Google Wallet, Isis, Starbucks’ internally created solution and Home

Depot’s partnership with PayPal. “Mobile is making the biggest impact on payment and the overall retail experience, is redefining in-store POS, and clearly

is the largest catalyst for change,” noted Andrew Morris, Director of

Market platform Dynamics, in a recent Retail Touchpoints Mobile

payment report. “In fact, mobile technology is changing the entire

way we think about payment. This redefinition of in-store POS is

happening quickly: already there are scores of retailers using ipads for

in-the-aisle purchasing capabilities and clienteling, or implementing an

‘Apple store model’ for store associates.”

Industry experts speculate that mobile payment could be one, two or

three years from saturation in the U.S. “Mobile payments won’t reach

critical mass in 2012, but may by holiday 2013,” noted Rosenblum,

Retail Systems Research (RSR). “Retailers are starting to embrace, at

least in some small part, the newer technologies such as Near Field

Communication (NFC),” added Salt. “we are

seeing NFC being adopted by vendors as varied

as the New Jersey Transit Authority and The

London Underground to retail establishments

such as Trader Joe’s and RadioShack. The

increasing integration of mobile-based payment

systems and the potential move toward virtual

stores we are seeing in Asia are certain to have

an impact in the U.S. in the very near future.”

Traditional retailers can no longer deny the impact that Amazon has

wrought on the retail marketplace, and they need to be armed and ready

to compete with this retail behemoth in order to come out on top when the

dust settles in January 2013.

“During the 2011 holiday season, Amazon offered consumers $5 in

exchange for scanning in-store items and comparing the price on

Amazon,” said Crames. This offer took price off the table when it comes

to differentiating a brand. “Since retailers know that price comparisons

are happening more frequently in their stores, they must invest to make

their multi-channel experience better, and to make the experience more

exciting for customers.”

“Retailers can not sit back and wait for competitors like Amazon to win

customers right from within the aisles of their own stores,” added Dave

Bruno, Director of Commerce Studies for Redprairie and Editor of Commerce

In Motion. “Engaging, personalized content delivered to shoppers on their

smartphones is a must-have capability for this holiday season.”

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HauteLook has developed a loyal following of deal seekers and fashionistas due to

its promise of curated assortments, home goods, elite experiences, and designer

clothing and jewelry at highly discounted prices.

Although HauteLook drives shopper engagement across email and social

channels, mobile has become a vital asset to HauteLook’s success. This is

especially true during the highly competitive holiday season: During Black

Friday 2011, the eTailer experienced a 700% boost in purchases made by

smartphone, while purchases via tablet increased 200% the same day.

“Mobile quickly has become a key part of HauteLook’s business,” said greg

Bettinelli, CMO for HauteLook. “Our members generally are on-the-go, so

our iphone, ipad and Android apps are a crucial part of our business. we’ll

definitely see an uptick of mobile usage during the busy holiday season. We

also are seeing that our members are shopping from their mobile apps while

at home.”

As of May 2012, mobile represented up to 25% of weekday logins and 35% of

those on weekends. Additionally, nearly 20% of weekday revenue and 30% of

weekend revenue came from mobile.

Currently touting more than 700,000 smartphone and tablet app

downloads, HauteLook has streamlined the mobile browsing and buying

experience based on its target customers’ mobile behaviors, as well as

the experiences those shoppers expect via smartphone and tablet. For

example, during the 2011 holidays, HauteLook created special sales and

curated assortments consisting of the “perfect gifts” for family and friends,

based on that feedback.

“When it comes to mobile apps, one size doesn’t fit all,” Bettinelli said.

“Smartphone and tablet apps are used in different ways and shopping

contexts, so we’ve tailored each of these app experiences. However, we are

always looking to engage our members in new and exciting ways, so we’ll

continue to explore opportunities for mobile-only promotions and events.”

Since its inception in 2007, HauteLook has developed a reputation as a

primary outlet for top fashion, the most coveted lifestyle brands, and elite

experiences, at up to a 75% savings. Sales are launched every day at 8 a.m.

pT, and reminders are sent via email

and push notifications before events.

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Mobile was a key asset to HauteLook’s 2011 holiday success. However, the eTailer utilizes multiple strategies across channels to boost

basket size and optimize loyalty initiatives. Greg Bettinelli, CMO for HauteLook, shared further insight on the must-haves for this holiday

season and beyond, as well as some best practices for e-Commerce, mobile and more:

1. keep It Simple: During the hectic holiday season, consumers want to get their shopping done as quickly and seamlessly as possible.

whether it’s via mobile, social or e-Commerce, retailers must implement a straightforward user interface that is easy to navigate. For

example, HauteLook leverages a “Find It Fast” feature, which allows shoppers to sift easily through inventory based on size, price range

and item. Moreover, the eTailer securely saves account holders’ credit/debit information, ensuring seamless purchasing processes via

desktop, laptop, tablet and smartphone.

2. develop consistent branding: As shoppers continue to consult the web and social networks to finalize buying decisions, it is becoming

more imperative for retailers to keep branding consistent. Merchants must deliver streamlined messaging across all member, brand and

internal touch points, including the web site, mobile apps, social media channels, emails and all other member-facing assets.

3. Mobilize, Mobilize, Mobilize: The success HauteLook experienced via mobile during the 2011 holiday season is no longer a rare

occurrence. The continued adoption of smartphones and tablets has offered retailers a new opportunity to market to and build

conversations with shoppers in a more direct way. As a result, it is vital that mobile

apps are easy to use and navigate, and are reliable during all shopping trips.

Moreover, the mobile experience must be fun as well as personalized to shoppers’

unique wants and needs, based on consumers’ past browsing and buying activity.

4. Stabilize the Site: Black Friday, Cyber Monday and other notable holiday sale days

lead to daunting spikes in traffic. Retailers must ensure that e-Commerce sites and

mobile apps can operate during these high-demand periods. Additionally, merchants

must be wary of adding “bells and whistles” that may compromise site loads and

increase likelihood of crashes, which will frustrate shoppers and veer them off course

from completing purchases.

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More consumers are accessing social networking sites to gather input from

family and friends before they buy. knowing this, retailers can use compelling

calls-to-action and messaging to tap these behaviors to drive click-throughs,

comments and shares via social media. This approach will be particularly

valuable during the busy and competitive holiday season.

A recent study from RichRelevance has revealed the profound impact social

sites make on purchasing decisions. Facebook’s influence on retail shopping

traffic grew 92% from 2010 to 2011, according to the company’s “Online

Consumer Report.” Moreover, although shoppers who link to retail sites from

Facebook and Twitter are less likely to make a purchase, with average

conversion rates of 1.2% and 0.5%, respectively, the average order value is

far greater on these sites than standard search via google, according to the

report. In fact, shoppers using Twitter had the highest average order value

($121.33) of all shoppers, while Facebook browsers had an average order

value of $102.59 (versus Google’s $100.16).

Social media has played a starring role in the new engagement paradigm,

allowing retailers to drive loyalty and one-on-one communication with

brand advocates and followers. However, social will become even more

paramount this holiday season to driving loyalty and purchases, according to

Andrea Morgan-vandome, vp of Retail Strategy and Solution Marketing for

Oracle Retail.

“Retail executives have seen two effective ways to use social media,”

Morgan-vandome said. “One is to use social as if you’re interacting at a

cocktail party. This strategy allows customers to talk to each other and

recommend items. However, this holiday season we’ll start to see more

retailers tapping into the other strategy, which is using social channels to touch

base with their customers and garner more insight on their behaviors and

preferences, such as providing the ability to review items or comment on a

blog post or YouTube video.”

Rosenblum reaffirmed the growing importance of social media, especially

when used in conjunction with mobile devices. “Social/Mobile is going to

be even bigger this year, especially for smaller retailers,” Rosenblum said,

“Especially for smaller retailers. They have recognized that social/mobile apps

are one way to ‘get their names out there.’”

SkuLoop, a digital promotions solution provider, helps retailers develop wish

list applications that enable customers to register for and share their most

coveted items across social channels. when linked to Facebook, these lists

and their updates automatically are published to consumers’ personal pages.

Since Christmas 2011, approximately

19% of SkuLoop’s clients’ fans tapped

into its “wish List” tool when it was

combined with other viral features,

including the ability to see friends’ wish

lists, according to Crames.

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“Through Facebook and our wish List app, we are able to

correlate demographic and geographic information to

specific products,” Crames said. Since last year’s holiday

season, Facebook has rolled out Timeline and also revealed

plans to implement more dynamic actions to join the “Like”

tool, such as “watch” and “Buy,” among others. “These

strategies will help merchants spread the word in a more

exciting way.”

By driving dynamic and memorable interactions via

Facebook, Twitter, pinterest and Instagram, retailers

can obtain in-depth data on customer sentiment,

overall brand loyalty and engagement, and other vital

information that can contribute to future cross-channel

holiday marketing initiatives.

“A lot of retail leaders are looking at social information and

using it in their planning processes for future campaigns,

such as during seasonal changes,” Morgan-vandome

explained. “Now merchants also want to integrate social

information into their CRM solutions to better shape the

customer experience across channels.”

Morgan-vandome added that more retailers will be

guiding store associates on how to access and analyze

online ratings, reviews, blogs and other social content to

help them be more informed about target customers and

their preferences. “This is what I call ‘lowering the barrier to

sales,’” she said. “I think we’ll be seeing a lot more of this

strategy during the upcoming holiday season.”

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The holiday season is a prime time to generate a loyal following via social media. However,

many retailers are missing the mark on creating meaningful conversations with shoppers

across Facebook, Twitter and other sites. Following are tips and tricks to drive shopper

engagement during the holidays:

þ embrace the latest social trends: pinterest and Instagram are among the newer

social sites that allow merchants to create a face for their brands as well as offer

consumers a behind-the-scenes look at company promotions. Use pinterest to

create holiday must-haves for customers’ friends and family, or take pictures of store

events and share them via Instagram.

þ think beyond batch-and-blast specials and bland status updates: post pictures and

lists of this year’s hottest gifts, and release holiday-themed music mixes to spread the

holiday cheer and encourage re-shares.

þ Start the conversation: Asking questions is an optimal way to build social dialogue.

Rather than shouting marketing messages and announcements to followers,

generate more intimate communications with consumers by asking about their

fondest holiday memories or favorite gifts.

þ get local: Best-in-class retailers are tapping into

social media to spread the word on local events.

Use Facebook, Twitter and Instagram, among

other sites, as an outlet to promote location-

specific sales, parties and other happenings,

and update consumers throughout the day to

generate more conversations. This tool also is

useful for advising local shoppers of their area

stores’ holiday-specific shopping hours.

NICE

A group of industry experts offer a variety of marketing tips for retailers this year:

üpaula rosenblum, retail Systems research: “As much as I hate to see it, I

expect the doorbuster trend to continue. I think all eyes will be on JCpenney,

to see what strategies the company puts into place. It will be hard pressed

to resist the doorbuster crack, but I believe the company will. If results are

positive, hopefully this will be the last year of this very ugly phenomenon…

otherwise it will continue to ratchet up….and we’ll be talking about Christmas

in July.”

ügary Schwartz, Impact Mobile: “Be sure to combine paper and mobile

advertising — and pay attention to percentages. According to various

research data from Flurry, ComScore, vSS and Alexa, retailers and brands

spend 29% of their budgets buying print when consumers’ time spent here

has dwindled to 6% of their day. Retailers spend 1% of their budgets on

mobile media although it occupies 23% of our consumers’ attention.”

üdave bruno, Commerce In Motion: “Now more than ever, retailers are

ready to truly embrace new devices, channels and networks for marketing,

promotion, and customer engagement. I expect to see a wave of new

additions to the marketing arsenals of retailers in almost every category —

from apparel to electronics to grocery.”

üandrea Morgan-Vandome, oracle retail: “Some retailers are working

towards making the shopping experience more interesting — focusing on

targeting assortments or recommendations and promotions to specific

customers. The holiday season obviously is a highly promotional time. we

think this year we’ll see the continuation of a promotional aspect, but retailers

will be much more focused on how to reach different types of customers. “

Marketers need to be on their toes during Holiday 2012: Doorbusters, limited-

time sales, daily deals and uncertain pricing scenarios are challenging retailers

to be ready to launch a new promotion at a moment’s notice. “Retailers should

have an arsenal of promotions in their hip pockets in case they don’t perform as

desired,” said Lauren Freedman, president, the e-tailing group. “They also need to

test tactics prior to the holiday season and get creative with promotions to avoid

the ‘me-too’ syndrome.”

To combat the fierce competition, some retailers are thinking outside the

box. One of them is Office Depot, which will use video to support its holiday

advertising initiatives. “During the holiday season, brands are constantly releasing

limited-time sales and special promotions, so it is important to ensure our ads

have up-to-date information,” said Nicole Fraley, Director, e-Commerce growth

initiatives for Office Depot. “The real-time, dynamic nature of videos, specifically

Smartvideos from SundaySky, gives us the means to generate videos rapidly and

cost-effectively to support fluctuating price points, holiday deals and last-minute

offers. These personalized videos

allow us to deliver a better user

experience that increases customer

loyalty and return on investment.”

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The continued shift to cross-channel browsing and buying has greatly impacted

how and from where shoppers purchase items and receive information.

The Internet ignited the birth of price-comparison shopping. However, the

increased competition for customer attention and dollars has intensified

due to the continue proliferation of smartphones. Consumers now can price

compare with their mobile devices while in store aisles, either via mobile web

or price comparison apps.

In fact, approximately 41% of consumers indicated that they have compared

prices in-store then purchased from another retailer’s physical store, according

to the “prosper Mobile Insights Mobile Survey, December-11,” a study co-

released by BIginsight. Moreover, nearly 26% of shoppers compared item

prices in the aisle then purchased from another retailer’s web site via a

smartphone or tablet.

Due to the influx of information, deals and offers available via web-based

and mobile tools, accurate and competitive pricing will be paramount for

success this holiday season, according to Crames.

“The competition for consumer attention will intensify, especially because flash

sales, curated events and other commerce models have trained consumers

to expect something new every day,” Crames said. “The prominent tools for

breaking through the clutter during this holiday season unfortunately will be

very driven by price. However, retailers can start to engage their audiences

on different dimensions beyond price well before holidays to capture and

build excitement that will flow through holiday purchases.”

Results from the RSR research report, titled “Retail pricing In A post-Channel world,”

reveal that retailers find the following to be the “top three strategic pricing

business challenges:”

Increased prIce sensItIvIty of customers 67%

Increased prIcIng aggressIveness from competItors 51%

Increased prIce transparency - the Impact of comparatIve prIce shoppIng 47%.

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Retailers need to hone their competitive skills as they strategize for

the 2012 holiday season. Lauren Freedman, president, the e-tailing

group, offered the following 4 tips: Retailers should have a…

ügreater focus on an omni-channel strategy

ükeener lens on how to compete against amazon and well-heeled retailers

üSharper look at their pricing scenarios

ücommitment to continuing to improve logistics

Shoppers are more eager and willing to hunt for deals by searching on the

web, Amazon, eBay and other discount sites to ensure they’re making optimal

purchase decisions. But the competition is heating up, with some sites offering

additional discounts to incentivize consumers to complete purchases.

When its price comparison app was first released, Amazon offered a $5

discount to consumers who scanned and compared items then purchased

through the app. This strategy will come to the forefront this holiday season,

leading to increased price cuts among retailers, according to Salt. “I fully

expect Amazon and potentially others to repeat the holiday season price

cutting from last season,” Salt said. “while this behavior is not sustainable,

it does drive consumers away from traditional retail and make them more

price sensitive.”

To combat the continual rise of price comparison strategies, Salt recommends

that retailers focus on differentiating the brick-and-mortar experience

from their online competitors. “Retailers must improve the in-store browsing

experience, which is not easily replicated online,” he said, “and increase the

sense of personal service from in-store staff.”

Retailers also can ensure customer loyalty during the holidays by implementing

consistent pricing and merchandise availability across channels. This consistent

journey will enable consumers to make educated decisions and in turn, have

more pleasant shopping experiences.

“Overall, I think retailers are doing well at creating consistent brand messaging

across channels,” Freed said. “However, they are less consistent on pricing

strategy and product selection. From a retail perspective, I know they are

trying to optimize channels by offering different selections and prices online

than they do in stores — sometimes they have to be more competitive online

than in a retail location. But when I go in a store and see a product for $50

then check the same company’s web site and find it for $40, it is confusing for

me as a consumer.”

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Today’s digitally empowered consumers value engagement from their preferred retailers and brands, and

will remain loyal to those that deliver a personalized approach. Data analytics can help retailers better

understand and respond to this consumer segment. “The smart retailer will focus all its energy on capturing

loyalist opt-in and hyper-target this demographic with tailored

messages,” noted Schwartz.

Data collection also can assist in pricing decisions. A benchmark

study by RSR Research discussed the importance of Retail

winners, defined as those whose year-over-year comparable

store sales outperform inflation. More than half (62%) of Retail

winners are collecting data from new channel promotions and

using it to make better pricing decisions.

RSR’s Managing partner, paula Rosenblum, shared with Retail

TouchPoints best practices for retailers planning to deploy a

customer loyalty program. “get your cross-channel houses

in order, and focus on customer services and experiences in

your stores,” she said. “Our data tells us that Retail Laggards

worry about the competition, while Retail winners focus on

their customers.”

Focusing on the customer experience is critical for retailers.

Seemingly, “an engaged customer will be far less likely to walk

out of the store and buy elsewhere,” according to Rosenblum.

As retailers continue to roll out mobile technology within brick-and-mortar stores,

particularly in advance of the holiday shopping surge, they also must educate consumers

on these new services. Buzek believes retailers who do not instruct consumers on how to

use mobile devices to assist in the shopping experience will see a decline in sales.

“I suspect there will be more CRM offerings that include Facebook and Twitter accounts

as part of the registration process, which will be done through special promotions,” Buzek

said. “Retailers would be wise to take advantage of this process now to gather information

from their customers and begin combining it with internal CRM data.”

The biggest change in strategies compared to last year’s holiday season will be in specialty

stores and the store experience. Buzek added: “As specialty retailers move to mobile

assistance and checkout, customers unfamiliar with this new way of shopping will need to

adapt quickly.”

Buzek predicts this holiday season to be heavily focused on mobile devices. “Retailers

are scrambling to get their tablets and other mobile devices ready for the holidays,” he

said. Both during the holidays and throughout next year, “it will be interesting to see what

happens with lines, and whether there will be mass chaos as groups of people flock and

follow mobile-equipped sales personnel to complete purchases.”

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The holiday season is a prime time for brands to release new, must-have

items for consumers. By utilizing customer-centric planning and forecasting

strategies, retailers can optimize inventory and assortment to decrease out-

of-stocks on high-demand items and eliminate excess inventory during this

holiday season.

“Ultimately, the amount and quality of retailers’ inventory plays a huge role in

their success,” Freed said. “we typically see it having a big impact on the

customer experience during the holidays, as it will again this year.”

Economic uncertainty and the growing influence of price on customer

purchase behaviors persist on deepening that impact. In the report

titled: The New Imperatives of Retail: Forecasting 2.0, RSR Research

reported that “Uncertainty continues to be the watchword for critical

holiday seasons, both for the total spend consumers will commit to, as well

as which products will reap the benefits.”

In response, best-in-class retailers are implementing enhanced assortment

planning and merchandising solutions to garner insight on customer purchase

history, preferences and behaviors to make better inventory decisions.

According to Aberdeen group’s report, titled: Mission-Critical Merchandising

and Replenishment, 39% of merchants are planning to establish their ability

to develop “what-if” scenario-based merchandising plans for assortment,

allocation, markdown and space optimization.

As customers continue to become the focus of inventory decision-making,

retailers must have customer-centric processes to avoid promoting and

distributing items that don’t align with their target audiences. By tapping into data

across channels, retailers can receive actionable insight on consumers’ most

desired items, colors and designs, leading to more efficient inventory planning.

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greg Buzek, president, IHL group, emphasized that retail companies must be

specific and focused in how they approach 2012 holiday strategies. He offered

suggestions in three areas:

1. If mobile checkout is part of your strategy, make sure you have a strong

plan for how to deal with excess shoppers. You had nice organized lines

previously…what happens to your store layout, to your customer service style

if you move to mobile checkout?

2. Take advantage of your cross-channel opportunities. plan for it

promotionally, plan for it on execution.

3. Include social media in your marketing efforts. Make a dynamic coupon that

can be tracked available due to a “Like” on Facebook or Twitter. Tie the

Facebook name to the coupon ID in some way so you can begin to link that

with your back-end loyalty systems.

“we’re seeing more retailers focusing on all channels when they start

their planning processes,” Morgan-vandome said, “previously, they

may have taken an isolated approach, but now retailers are looking to

better understand how consumers shop from one channel to another.

That way, if something is being purchased online, they can learn how

to roll that into store planning.”

Retailers also are utilizing more detailed factors, such as weather

and social sentiment to optimize merchandising during the holidays.

“Some retailers are trying to understand what people are saying

from a social perspective and including it in decision-making for

assortment,” Morgan-vandome explained. “This is still very early in the

process, but we’ll see retailers move in that direction and include it in

their customer experience.”

More than half (51%) of retailers are seeking to achieve a “greater

balance between local micro-merchandising and chain-wide

assortment needs across all channels,” according to Aberdeen

group research.

However, some retailers are not focusing on making all merchandise

available in stores and across digital channels, which is imperative

for success, according to Crames. “Right now, many of these

channels are siloed, with e-Commerce sites running as separate

storefronts,” she explained. “This is hard to manage as an

organization because mobile and social span across these units, and

force new ways of orienting around the customer.”

Rosenblum also indicated the low adoption of distributed order

management and cross-channel fulfillment. Although these strategies

are highly prized by retailers, few actually have the tools and

technologies to leverage them efficiently, she reported. “Having said

that, we fully expect retailers to do whatever they can to get product

into the customers’ hands,” she noted. “No one wants to see a repeat

of what happened to Best Buy during last year’s holiday season. That

means it’s imperative to treat inventory

as a shared resource across channels.”

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Chalk it up to the proliferation of technologies and devices, and a fickle

consumer mindset — shoppers expect relevant, meaningful interactions,

and retailers are ramping up their initiatives to get more personal with

customers. During the holiday shopping season, it will be more critical than

ever for brands to stand out in the crowd of stores.

particularly due to the breadth of information consistently available to

today’s consumers across a wide variety of channels, customer loyalty and

retention have become harder than ever to encourage. The top pressure

driving retailers to personalize the shopping experience is the increase

in customer research prior to a purchase, cited by 36% of respondents

to the March 2012 Aberdeen Research report, Hyper-Connected Online

Retail Personalization. Between their smartphone apps, daily deal sites and

discount e-Tailers, shoppers really don’t need to frequent one particular

store unless they see a clear value proposition.

A key element of current retail strategy conversations is how to develop

ways to use technology to differentiate the customer experience. Half

of the U.S. web e-Tailers in the 2011 edition of Internet Retailer’s “Top 500

guide” said they were using personalization on their e-Commerce sites, up

from 32.6% of retailers that reported doing so the year prior.

“we believe retailers will work to create more personalized and targeted

promotions,” noted Crames. “And there is an opportunity for them to

connect with groups of consumers effectively using technology and

social media to engage audiences and develop and build relationships

with consumers.”

Crames added: “we also believe that the acceleration of deals and

corresponding deal fatigue will make retailers have to work harder this

holiday season.”

Aberdeen Research pointed to the following action items that retailers are

implementing to optimize personalization initiatives:

wine.com recently launched a personalization and recommendation

initiative to present more relevant offers to its online shoppers. Customers

who log into the site receive unique recommendations based on their

recent purchases, product searches and purchases made by customers

deemed similar to them. Shoppers also have the capability to personalize

their own profile pages, complete with a picture; recent site activity

such as product reviews and searches; and wine club and Steward-Ship

membership information. The eTailer also added a one-click checkout

feature to streamline the shopping experience.

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By initiating a localization strategy, retailers can present special offers and events

relevant to the local environment and shopper. During the holiday shopping

season, the in-store experience is even more integral to revenue optimization.

Though a key priority for retailers, localization remains a critical challenge,

according to a recent study from RSR Research. More than half (53%) of survey

respondents reported localized assortments as critical to their company to some

degree or another. presenting localized offers is truly a must-do for retailers,

according to industry experts.

One of the most effective ways to deliver personalized offers is to shoppers’

smartphones. “Retailers must be able to deliver localized content, location- and

customer-specific offers, enterprise-wide inventory, and rich product content to

the smartphone of every shopper before, during and after they enter the store,”

noted Bruno.

progressive retailers also are implementing solutions to analyze customer

data points, including income, point of sale data and web searches to target

promotions at a highly specific demographic of potential buyers. This strategy is

particularly effective during the holiday season.

Retailers also are migrating to social and digital channels to provide

localization opportunities. “Interestingly, mobile seems to be making the

biggest positive impact on the smaller retailers, who can get their messages

out to the public for relatively short money, in a pretty intimate fashion,”

Rosenblum said. “That’s why Facebook pages, FourSquare and other vehicles

are important: They get really local. I think consumers actually are rooting

for the smaller retailer, and if that retailer can catch their attention, and be

reasonable on price, there’s a lot of opportunity.”

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Both small, regional retailers and large, national brands are taking advantage of localization strategies.

Sears recently launched SearsLocalAd.com, an online service designed to provide customers with access

to additional local deals beyond its web offers and weekly Sears print circular. The online shopping portal is

dedicated to local customers, allowing them to shop smarter by previewing new local deals updated every

week, and includes enhancements for Sears’ Shop Your way loyalty program members.

Localization is pre-selected based on the shopper’s location and can be changed to another store within

the experience. Shoppers can search their nearest Sears store and browse deals by department, brand

or price point, and filter it to find offers of interest. SearsLocalAd.com helps shoppers ensure products are

available before they go to the store. The web site also shows in real time how many items currently are in

stock at the chosen location.

üStore-based retailers are rolling out localization strategies

with the knowledge that these programs can be very

effective traffic drivers;

üLocalization is a tool that store-based retailers are using

to differentiate themselves from the more convenient

shopping options provided by e-Commerce players;

üMost importantly, localization transforms the perception

of a store from a cold, money-hungry national retailer

into a community store.

(Source: Sean Deale, Retail Industry Analyst at RetailNet group LLC “5 ways Chain Retailers Are Localizing Their Stores”)

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