OPERATIONS

The most important factor of online holiday shopping is…

BY Deena M. Amato-McCoy

When it comes to the online shopping experience, delivery trumps everything.

That’s according to a new survey by active delivery management platform Convey in which 40% of consumers report that delivery is the single most decisive factor of the shopping experience. Asked to choose the most important delivery factor during the holiday season, 29% of respondents prefer a specific promise date, and 23% select a delivery date range, bested only by cost at 33%.

In addition, shoppers expect retailers to make a commitment and keep it.

“In our recent survey, shoppers were clear: While free and fast shipping are still table stakes, promise-by dates and the way a retailer handles on-going issues are equally important,” said Rob Taylor, CEO at Convey. “With half of all shoppers experiencing at least one issue per year, retailers must take an active role to control the outcome of deliveries during the busy holiday season.”

The survey found that more than 95% of shoppers expect retailers to proactively respond if a carrier’s estimated delivery date changes while a shipment is in transit, and more than 90% expect some form of action or compensation for missed promise-by dates.

Preferred responses to a missed promise date include: refund of shipping costs (50%), discount for a future purchase (19%), expedited shipping for a replacement product (10%), and expedited shipping for a future purchase (10%).

In other findings:

• Nearly all (93%) shoppers expect to receive proactive shipment updates. When a delivery exception occurs, 41% of shoppers want to be notified immediately, preferring e-mail notifications (50%) to SMS (21%), phone calls (12%), tracking page updates (8%), and Facebook notifications (1%). Only 7% prefer no contact at all.

• Nearly all (97.5%) shoppers want to self-serve or interact with a retailer directly to resolve delivery issues, with those aged 18-34 being 35% more likely to prefer options such as pick-up lockers and holding a shipment at a terminal.

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Report: Aggressive holiday promotions to cut into retailers’ margins

BY Marianne Wilson

Retailers’ margins will be substantially lower in 2018 due to aggressive discounting and pricing.

That’s according to research from global strategic advisory and consulting firm Berkeley Research Group, which found that sales increases will likely come at the expense of increased profitability as added promotional activity and complexity will be required to generate top-line sales. In a survey of more than 100 high-level retail executives in October, 64% of the respondents said they expected promotions to play a more significant role in overall sales during the 2017 holidays.

Even consumable products are likely to see more discounting. Seventy percent of grocery store executives surveyed expect promotions to play a significant role in overall sales growth.

Sales results will differ meaningfully by retail segment, and given the calendar, holiday success will likely be driven by the final two weeks of the season, according to BRG.

“The extended holiday shopping season will likely require retailers to concentrate promotional activity on the final two weeks of the season,” said BRG managing director Rick Maicki, co-leader of the company’s retail performance improvement practice. “This, of course, will result in increased execution and complexity costs and will likely lead to further retailer challenges in 2018.”

Also, many retailers are entering the holiday season on the heels of soft sales in the late summer and early fall. Some struggling companies will be aggressive in their promotional activity, as they seek to clear inventory to generate cash and drive sales.

“The 2017 holiday season will likely generate less cash flow than what was achieved last year,” said managing director Keith Jelinek, co-leader of the retail performance improvement practice. “The impact of lower margins will put more stress on many already challenged retailers.”

Other findings from the BRG survey and analysis include:

• Executives sent BRG a clear signal that promotional activity will be higher this year, and this message crossed retail segments. Through the holiday sales period, success will hinge on retailers’ real-time agility.

• Retail sales increases will likely come at the expense of increased profitability, as added promotional activity and complexity are required to generate top-line sales. This dynamic will impact retailer success not just during the 2017 holidays, but will likely lead to further retailer challenges in 2018.

• Online sales are expected to increase by approximately 15% this holiday season, accounting for nearly half of the increase in retail sales dollars this year overall. The continued impact of e-commerce will push retailers to promote heavily to drive store traffic.

• Electronic retailers’ in-stores sales were down by 5% in 2016, and BRG expects just a 1% increase this year. Retailers in this critical holiday category may need to promote frequently and at deep price cuts to drive traffic in store.

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Fast-fashion giant exploring data breach

BY Deena M. Amato-McCoy

Forever 21 is investigating whether it has become the newest victim of a cyber-attack.

The fast-fashion retailer learned from a third party that hackers may have gotten unauthorized access to payment card data at certain Forever 21 stores. Upon hearing the update, the retailer immediately launched an investigation of its payment card systems and engaged a leading security and forensics firm to assist.

Forever 21 implemented encryption and tokenization solutions in 2015, a move that left only certain point-of-sale devices in some Forever 21 stores vulnerable when encryption support went offline. The company’s investigation is focused on card transactions that occurred in stores between March and October 2017.

Since the investigation is ongoing, the retailer said it is too early to reveal specific details. However, Forever 21 expects to provide additional updates once specific stores and timeframes are revealed, according to the company.

“We regret that this incident occurred and apologize for any inconvenience,” the company said. “We will continue to work to address this matter.”

The fast-fashion retailer also urged customers to closely monitor their payment card statements. If customers notice an unauthorized charge, they are encouraged to immediately notify the bank that issued the card, there retailer said.

Based on payment card network rules, cardholders are typically not responsible for such charges.

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