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Cardlytics: Spending trends for the holidays—and how to generate more revenue

BY Marianne Wilson

As more customers do their holiday shopping online, it’s critical for marketers to keep a pulse on where, when, and how shoppers will tackle their gift lists this year.

That’s according to a new report from purchase intelligence company Cardlytics, which analyzes actual purchase data on when, where and how much consumers spend both in-store and online. The company’s “2018 Holiday Spend Report” identified the following holiday spending trends — along with some tips on how to generate more revenue.

1. Brick & Mortar stores slow loss of share by driving sales online: Brick-and-mortar retailers’ share of spend decreased nearly 2% between 2016 and 2017, but spend at these same retailers’ online and mobile properties is on the rise.

“Help customers see the convenience of in-store purchases by playing up the value of a hands-on experience, verifiable quality, and easy gift returns,” the report recommends. “Also, strengthen online and mobile channels with convenience factors like price matching, gift guides, and free shipping to attract more digital customers.”

2. Black Friday and Cyber Monday are declining in significance: In the last few years, spend across the season has shifted to well before and after Black Friday and Cyber Monday. As a result, the mid-season spike in spend around the retail event was less significant than in years past. In fact, 30% of all holiday sales occurred the month before Black Friday last year. Online-only retailers experienced a drop in Black Friday sales year-over-year, while brick & mortar.coms saw the most dramatic Black Friday/Cyber Monday spike.

The report advises brick-and-mortar retailers with a strong online presence to take advantage of the holiday sales events by playing up their deals along with such online convenience factors as reliable shipping, no crowds, more family time, and more sleep.

And as customers head in-store for the final weeks of the holiday season, stores should promote in-store exclusive deals to help them purchase final gifts without the stress of anxiously monitoring their package tracking info, according to the report.

3. Holiday shoppers fall into four distinct timing segments: The most cohesive way to segment and understand holiday shoppers is to look at when people do the bulk of their holiday spending. Cardlytics identified four distinct timing segments, the most traditional being “early birds,” a group that spend before Black Friday, with 82% of their holiday spending done in-store.

Other groups include “Black Friday warriors,” the segment that spends around Black Friday, with 94% done in store; and “Procrastinators,” the group that spends after Black Friday and spends the greatest percentage online, particularly at brick & mortar.coms. The final group is called “Steady Shoppers,” who spend across the season and account for 40% of all holiday spend. This is also the most generous segment, with an average holiday spend of $2,015) compared to an annual average spend of nearly $2,000.

“Customize messaging during different phases of the season to capture each of the distinct shopper segments and avoid leaving money on the table,” recommended the report.

Here are some more takeaways on how to generate more holiday revenue for 2018 from the Cardlytics report:

• Extend holiday marketing before and after Black Friday/Cyber Monday. While Black Friday and Cyber Monday are still important, they are just one piece of the holiday pie. Avoid leaving money on the table by tailoring your marketing efforts to the four holiday shopper segments. This will help capture spend from customers at each point in the holiday season and drive repeat visits from those valuable Steady Shoppers.

• Emphasize convenience factors — both online and in-store. Customers increasingly value the convenience of online channels. Traditional retailers are starting to reduce their losses with stronger online properties. These Brick & Mortar stores should continue to play up their online channels while also emphasizing convenience for their physical locations: the hands on experience and peace of mind when receiving your holiday gifts on time and in one piece.

• Take advantage of holiday customers’ tendency to shop new retailers in the final weeks, but don’t forget about driving loyalty. For gifting categories, the customers you acquire during the holidays account for a significant portion of your total customers throughout the entire year. Target your marketing broadly to drive more purchases from new customers — particularly in those final weeks of the season when they’re scrambling to wrap up their lists.

For personal purchase categories, focus your marketing efforts on increasing spend and purchases among your loyal customers. This will help build consistent shopping habits for success going into 2019.

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Payment flexibility tops customers’ holiday wish lists

BY Deena M. Amato-McCoy

Customers want to buy now, and pay later this holiday season.

This was according to “The Square Capital Consumer Shopping Survey” from payment solution Square, which revealed that 61% of consumers said they would feel more comfortable spending more this holiday season if they knew they had the ability to pay for purchases over time.

According to data, shoppers plan to spend around $1,300 this holiday season, and almost half (45%) of consumers anticipate spending more than $250 on a single item. A majority of customers (72%) prefer to shop in person for purchases over $250.

However, companies that offer the option to pay for purchases over time could earn them more holiday sales. This also gives smaller retailers the potential of winning more wallet share this holiday season, as 68% of consumers said they would be more likely to consider a small or local business if they offered financing options.

Other findings include:

• The majority of consumers (84%) indicate they prefer to support small businesses whenever they can.

• Over half (56%) will begin shopping before Thanksgiving and of those, 23% started their shopping by August of this year.

“We know that consumers prefer to support small businesses whenever they can, and we want to make sure this holiday season is no exception,” said Jacqueline Reses, head of Square Capital. “We’re excited to see what a level playing field can do for small business sales now that more sellers have access to financing options that provide flexibility to their shoppers.”

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Regulatory Wrap-Up: Weekly recap of retail-related legislative, judicial developments – Nov. 5

BY CSA Staff

Wages

Federal – As Democrats continue to press for minimum wage increases on the campaign trail, Larry Kudlow, Director of the National Economic Council, reiterated the administration’s position against any increase to the federal minimum wage.

New Jersey – Several legislators introduced a bill in the general assembly to raise the state’s minimum wage to $15/hr by 2023 with no exemptions. Other legislation has been introduced that would eliminate the state’s tip credit. Negotiations continue between the administration and legislative leadership. The governor prefers no exemptions and the senate president has discussed the need for specific provisions regarding farm workers and youth.

Miami Beach, FL – The state attorney general, along with several business groups, filed briefs with the state supreme court arguing that a lower court ruling should be upheld. The ruling in question found that Miami Beach’s 2016 ordinance raising the minimum wage above the state minimum violates state law. The court has yet to schedule oral arguments in the case.

Washington, DC – Supporters of Initiative 77 announced their intent to hold a referendum in response to the city council’s decision to repeal the measure. The voter-approved initiative would have eliminated the city’s tipped wage but the city council chose to repeal it. If successful, the backer’s referendum would place the issue on a future ballot for a second vote. Supporters must collect 25,000 valid signatures before the mandatory 30-day congressional review period concludes. That time frame could be several months as the review period is thirty Congressional calendar days and Congress is in recess until after midterm elections.

Paid Leave

Ford – The automaker expanded its paid leave policy for salaried employees. The company is now offering up to eight weeks of paid leave for the birth or adoption of a child with an additional 16 weeks of paid disability for birth mothers.

Scheduling

Philadelphia, PA – A city council committee passed the proposed fair workweek scheduling bill with a 6-2 vote. The language was amended from a 14-day period to 10 days for advanced notice of schedule changes. Employers will be subject to penalty pay for any changes within that 10-day window. The full council is expected to vote on the bill Nov. 29 and additional amendments could be considered.

Wage Theft

Chicago, IL – The city council unanimously approved legislation creating a local Office of Labor Standards. The new agency will be tasked with enforcing the city’s labor laws including wage and paid leave violations.

Labor Policy

NLRB – The National Labor Relations Board extended the public comment period for the proposed joint employer rulemaking for an additional 30 days to Dec. 13.

Google – On Nov. 1., Google employees from around the world participated in an organized walkout in objection to the company’s handling of several recent high-profile sexual harassment cases. The organizers released a list of demands and intend to organize more walkouts if management does not respond in a meaningful way, addressing what they view as issues related to the company’s culture.

McDonald’s – The company announced a new benefit for their workers. The campaign, “Where You Want To Be,” connects interested employees with mentors that have expertise in varying fields of work. The company announced that the new benefit is an extension of existing career and education-related benefits, including tuition assistance and reimbursement.

Taxes

San Francisco, CA – The city’s most vocal members of the business community (largely tech leaders) are publicly split on a ballot initiative that would tax large businesses to raise revenue for homeless services. The Mayor also opposes the tax, citing the impact it could have on job growth in the area. The measure resembles a Seattle “head tax” designed to address homelessness (dubbed the Amazon tax). It drew national attention before the city quickly scuttled it under pressure from the united business community. Voters will have the final say on Election Day and other jurisdictions are likely to take cues from the outcome.

Key Takeaways

  • With Election Day closing in, the president returned the media’s focus to a comfortable subject for him – the immigration issue. Last week he announced that he intends to challenge birthright citizenship through executive action and send troops to the U.S./Mexico border. Those announcements dominated cable news television coverage and political conversation for days, demonstrating that he will continue to use his bully pulpit to touch back to the immigration issue to fire up his base. Employers need to be cognizant of this dynamic because they may find themselves demonized as part of this conversation in the future.
  • The walkout by Google workers last week further demonstrates the increasing power of employee activism and brands, regardless of the industry, are realizing that employees are a volatile political constituency, much like their consumers and elected representatives. Google has been forced to take significant action as a result of pressure from their workers, not public opinion or political leaders. All employers need to understand this emerging dynamic.
  • Early voting numbers indicate this could be the highest turnout midterm election in decades. Historically, that has been good news for Democrats but many pundits are tempering their prognostications this cycle. There is however little doubt that Democrats will make gains at the federal and state level because Republicans, particularly at the state level, are at a “high water mark.” Expect Democrats to make significant gains in a number of states – including states with large restaurant footprints – shifting the political dynamics.

Legislature Status for Week of 11/5/18

  • The United States Senate is on recess this week
  • The United States House is on recess this week
  • Three state legislatures are meeting actively this week:
    • MA, MI, & NJ

Podcast

Check out our Working Lunch podcast each week that includes further analysis into these legislative issues, policy, politics and much more. You can find Working Lunch on the Nation’s Restaurant News website, or by clicking here, and when you download the podcast and subscribe on iTunes here.

The Regulatory Wrap-Up is presented by Align Public Strategies. Click here to learn how Align can provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.

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