The Economic Impact
Inflation is skyrocketing – there’s no question about it. Food prices are up at least 10%, energy is up 34%, and all other products in the market are up 6%. As pandemic conditions alleviate, consumers are putting their money toward experiences, including travel, entertainment, dining, and any other activities that were severely limited over the past two years. Many clients are asking, how does this impact our retail marketing strategy?
With spending up within certain categories, this means that fewer consumers are spending money toward retail and other physical product sales that took a severe hit during the pandemic. Retailers face two big challenges – inflation and shifting consumer purchasing patterns. In only the first three months of 2022, consumers bought 6% fewer retail items than they did in the same period of 2021.
Strengthen Your Retail Marketing Strategy
Although there has been a general decrease in the overall purchase frequency for retail, the average spend per purchase has increased 3% since 2021. Marketers need to take advantage of this by encouraging higher AOV within the fewer transactions that they receive. It’s important that retailers adjust their strategies to account for rising inflation and ensure they maintain adequate profit margins.
- Expand Online Sales Options and Improve Accessibility
It is expected that approximately 20.3% of retail sales will be conducted online in 2022, which accounts for a significant amount of a business’ revenue. This number is only expected to increase beyond 2022. Therefore, it’s important that retail brands build a website that customers can visit (if they don’t already have one) or optimize their preexisting website to maximize efficiency. In addition to a website, a seamless mobile application is attractive to consumers who prefer to purchase online as opposed to in person. Combining the website and mobile application provides a seamless experience within your retail marketing strategy.
- Data-driven Sales Trend Analysis
At Marketsmith, we build data-driven strategies for our clients with media plans that will maximize ROI. In order to optimize campaign spend, brands can benefit from analyzing sales trends in greater depth. Understanding seasonality, the purchase journey, the length of time consumers spend researching prior to purchasing, and buying behavior is extremely important to succeed in today’s economy.
- Innovative Brand-Leveraging Campaigns
One of the best ways to retain customers is to build a loyalty program that encourages them to continue repurchasing. By building a more personal relationship with customers through a loyalty program, customers will be more inclined to purchase from a company they have a personal relationship with, even in times of economic hardship. More than ever before, consumers are looking for incentives to buy, emphasizing the importance of rewards and “what’s in it for me?”
Take Action and Adjust
While the retail market is certainly on the downturn amid inflation, there are actions marketers and companies can take to insulate themselves from the negative impacts. Here at Marketsmith we can help your brand navigate the shifting retail landscape using data-driven strategies.