‘Discount Season’ Starts Early as Winter of Consumer Discontent Looms

Pieter van den Broecke
Pieter van den Broecke

To say that consumers have been hit by a ‘force multiplier effect’ of negativity in the second half of 2022 would not be an understatement. 

First, the war in Ukraine disrupted global food networks at a time when supply chains were just beginning to stabilise after the worst effects of the pandemic had been largely weathered. 

Secondly, almost every Western economy now feels the effects of central banks’ measures during the pandemic to print more money (and stimulate consumer spending), leaving many now with inflation at levels not seen in almost half a century. 

And finally, the energy insecurity resulting from the Russian sanctions in Europe has led to a doubling down on existing inflationary pressure, causing the cost of living crisis for tens of millions of ordinary people across Europe.

For many retailers, the holiday season (starting around Black Friday/Cyber Monday and lasting right through to the New Year sales) is a crucial period that can often either make or break a P&L. 

Although the retail ramp-up to the holiday season is widely reported each year, the effects of 2022’s political and macro-economic events on the consumer purse mean that many retailers are having to rethink their traditional sales approaches, starting (bigger) discounts earlier and for longer, inevitably putting added stress on already stretched supply chains and retail associates.

Delivering on the promise

During the height of the pandemic, many retailers over-ordered products while there were supply shortages, meaning that now (many) retailers have a surplus of products that they are keen to shift. Inflationary pressures will force many retailers to cut prices and offer bigger discounts than normal, too, meaning millions of consumers across Europe can expect a wave of offers, discounts and other price cuts this holiday season. 

Before that advent of Amazon’s next-day delivery promise, retailers did not have to worry about loyalty so much, but that has since changed. Over the last decade, retail culture has shifted to a ‘yes’ culture, pushing retailers on service and delivery, adding complexity and challenges to the supply chain technologies that underpin brand promises. 

Add to that, consumers’ expectations are at an all-time high. They want the same personalised experience whether shopping in-store or online. Retailers need to move beyond the basics to focus on delivering on this experience and expectation while driving business growth. 

According to recent research from Manhattan Associates looking at consumer and retail expectations in 2022, while the vast majority of surveyed retailers stated that they have a level of interconnection between their online and in-store functions (83%), only around half are offering buy-in-store and return online (50%), or buy online and return in-store (46%).

What’s in store, stock, store… 

And only 6% of retailers believed that they had an accurate overview of their inventory across their entire business (in-store and online) 100% of the time – something that is absolutely vital to ensuring not only profitability but also a seamless customer experience.

Furthermore, almost a quarter of consumers (24%) now expect shop assistants to be able to check availability in a nearby store if a product is out of stock or order that product for home delivery or collection, highlighting the blending of the physical and digital retail spaces. 

The cost of living crisis is influencing consumer spending habits too. According to the same research, 82% of in-store purchases are now influenced by online channels, and the most common reason for starting the shopping experience online was to find the best price (46%), followed by making sure the product is in stock (42%).

Retailers will have to leverage every single piece of inventory across in-store and digital networks to deliver profits this Winter, and many are revaluating the roles of their stores, recognising their added value as strategic hubs for online sales, not least as a fulfilment hub for click & collect, returns, endless aisles and same-day delivery. 

Discount and deliver

As retailers brace themselves for prolonged sales cycles and greater discounts, there is a very real possibility of price wars in some markets. With such fierce competition for the consumer wallet this year, the emphasis will be on retailers to provide not only significant markdowns but also deliver exceptional customer service. 

As the Winter of consumer discontent looms, the economic challenges faced by millions (retailers and consumers) have once again put supply chains firmly in the spotlight, making topics such as inventory visibility, omnichannel commerce and customer communication key topics of discussion for strapped retailers, around family dinner tables and journalists in newsrooms all over the globe.

Author Bio

Pieter van den Broecke

Pieter van de Broecke is Managing Director Netherlands, Belgium and Germany at Manhattan Associates

Manhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology, and unmatched experience help drive our customers’ top-line growth and bottom-line profitability.

Manhattan Associates designs, builds, and delivers leading-edge cloud and on-premises solutions so that you are ready to reap the rewards of the omnichannel marketplace across the store, through your network or from your fulfilment centre.

Header Image by Markus Spiske on Unsplash

This post is sponsored by Manhattan Associates

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