The holidays are rapidly approaching, and the holiday season is big business for retailers! Americans spent over $886 billion during the 2021 holiday season according to the National Retail Federation (NRF) which is impressive considering that it occurred during a year that was plagued by challenges triggered by the pandemic. While some of the pandemic-related challenges continue to persist, industry experts are still predicting an overall increase in U.S. holiday retail sales for 2022, even with a potential recession on the horizon.
For some retailers, the holiday season is just another day, however, for many others, it’s their “Super Bowl” as retail sales generated during the months of November and December can comprise a significant portion of overall sales for the year. As such, for many retailers, holiday sales can play a key role in determining the overall profitability and success of the entire fiscal year.
What some retailers don’t realize is that many American consumers typically start their holiday shopping in the Fall. In fact, it is estimated each year that approximately 40 percent of holiday shoppers start the process before Halloween, which means a good portion of consumers are currently exploring and researching products and looking for deals at the same time. As such, it’s time for retailers to roll up their sleeves and focus on their holiday game plan as the months of November and December will most likely be a blur.
To set your retail operation up for a successful holiday season, our DHW Retail Team offers the following tips on how to increase sales, reduce risk, make 2022 a successful year, and carry over some great momentum into the new year.
Maximize Social Media. Most U.S. consumers own smartphones and utilize various social media applications thus, it’s no wonder social media has become a key channel (and in some cases a preferred method) to connect with consumers. As such, tap into your customer information or loyalty program databases that you’ve built to communicate details and information about new products, special offerings, deals, and store events, especially for preferred or loyal customers as messages of this nature will help drive traffic to your stores. Personalize messages to the extent possible as this resonates well with the consumer too.
Showcase Your Signature Products. If your retail stores offer signature or one-of-a-kind products, the holiday shopping season is a perfect time to promote them as they can drive additional or incremental sales not only for the holiday shopping season but future sales as well. To ensure success, be sure to prominently display, cross-promote, and strategically merchandise any signature products or items throughout the store and accompany them with the appropriate messaging as this strategy could help increase repeat customers going forward.
Train Your Employees. The holidays are undoubtedly busy and with that comes the need for labor as your stores experience increased traffic. One of the biggest complaints I generally hear from customers is that there is never anyone around to help them when needed. Plus, when a store associate does arrive, their knowledge of the product is either limited or non-value added. As such, take the requisite time to thoroughly train and teach store associates how to greet customers, the proper way to help customers locate what they need in the store, the art of providing anticipatory service and assistance, and simply ensure that they know and fully understand the products that are being sold within their department. Additionally, with added traffic, it is imperative that you educate store associates on basic loss prevention and how to identify and prevent theft throughout the store. Finally, take time to walk the floor and observe your store associates in action as this allows you to gauge their ability to serve the customer and provide constructive feedback when necessary.
Clean! All customers love and expect a clean and organized store. In fact, studies show that sales in a clean and organized department exponentially surpass those in a department that is dirty, unorganized, and in disarray. Remember, the holiday shopping season is your time to shine so, make shopping easy for your customers by adding additional room and space around displays, clearing aisles of unnecessary debris, organizing shelving, and ensuring items are in their proper place on the sales floor throughout the day, and before opening the doors each morning. Also, take time to clean and/or repair fixtures, floors, carpeting, displays, and essentially anything the customer may see or encounter on a regular basis during their visit (especially restrooms!). In short, the overall consumer appeal of your stores can play a key role in whether customers shop in your stores and, in many cases, decide to return for repeat purchases.
Manage Inventory! Another top complaint from customers is out-of-stocks. In fact, out-of-stocks can be the kiss of death for many retailers, especially if it’s a frequent occurrence in your store. In contrast to not having enough product, overproduction can also present problems as excess product generally gets discarded, donated, or significantly marked down. Retail shrink can also eat into margins if you’re not practicing first-in-first-out (FIFO) procedures with perishable products. As such, it’s critical that you understand what is selling and what is not and take proper action to ensure your ordering and procurement systems are in sync with demand. A good starting point is to run a periodic sales report to identify your top-selling, and least selling SKU’s, understand “when” they sell, and then plan accordingly. This exercise will help you understand the true demand for your product(s) and from there, you can match your ordering and production plans to it. Finally, train your department managers on these concepts, reinforce them, and implement strict accountability measures around each.
Keep an Eye on Loss Prevention. Unfortunately, the increase in customer traffic in your stores during the holiday season generally equates to an increase in theft, fraud, and the risk of loss. While most believe customers are the biggest culprits when it comes to theft, retailers must understand that vendors and even their own employees can represent a significant source of loss too. Rogue coupons, counterfeit currency, and credit card fraud are perennial issues for just about every retailer. Add in the disastrous impact that cybercrime can have on a retail organization and retailers quickly realize they operate in a risky business environment. The good news is that retailers have several solid and inexpensive solutions at their disposal to combat these issues. Such as educating your employees on how to provide excellent customer service as the last thing a thief wants is to be noticed. Providing thorough training on how to spot and identify the tactics used in connection with distraction, fake payment methods, and where to properly merchandise and locate high-value inventory throughout the store. Implementing strong inventory receiving procedures and placing strict controls on when and where vendors may enter and exit your stockroom. Finally, make sure your information technology systems are solid, up-to-date, and well-protected from those who may attempt to breach your systems for financial gain. In addition, train your employees on how to identify dishonest or fake attempts to access your systems.
Understand Sales Taxes! As a tax-aligned CPA, I would be remiss not to mention something regarding taxes. For retailers with brick-and-mortar stores, sales taxes are generally straightforward. However, if your organization also sells online or sells to out-of-state customers, sales tax can potentially be an issue. As such, understand that certain nexus creating activities such as delivering product across state lines in your company-owned vehicles or having a certain level of sales or number of transactions in a particular state that you do not have a physical location in can still potentially trigger a sales tax liability in that state for your entity. As such, consult with your CPA and understand the rules if you are selling to customers outside of your home state. In short, don’t let an unexpected state sales tax notice or audit from another state drag down a successful holiday sales season.
While these are just a few tips on how your retail organization can ensure a successful holiday sales season, our DHW Retail Team believes they are some of the most critical. To learn more about these concepts or to discuss many other ways your retail organization can increase sales, reduce risk, and improve the overall consumer appeal of your stores, please contact Tim Reynolds via tim@dhw.cpa or at 828.322.2070.