Hedging bets on ‘hallmark’ holidays

DavidJonesValentinesWith Valentine’s Day promotions events reaching a crescendo earlier this week, the task for many retailers now invariably turns to how much cupid-adorned, red paraphernalia needs to be cleared and how this will be achieved in the face of a rolling events-led calendar. More discounting, did someone say?

A peremptory glance at department store giants David Jones’ and Myer’s online marketing approaches perhaps best displays the dichotomised thinking of many retailers stuck in the crosshairs of trying to plan for yet another promotion.

Late on Monday, David Jones’ landing page was immediately overtaken by targeted advertising, both imploring customers to pay for a service (delivering flowers for the big occasion) followed by unmissable banners on the homepage that link to gift selections for him and her.

Across the divide, Myer’s homepage looked like business as usual and you needed to scroll down the entire page to see a solitary banner, which linked to its gift selections. In today’s perpetual retail calendar, is Myer necessarily wrong to take a less bombastic play and can retailers really expect a boon to the coffers based on putting all its eggs in one basket – or is that reserved for Easter around the corner?

Picking the right battles

Valentine’s Day is the seasonal day where a handful of companies will be watching the cash roll in. Australian online beauty retailer, Ry.com.au, has seen a big uplift in spending for February.

James Patten, co-founder, said preparing for trends and the abundance of calendar events are a dream for online retailers, who are placed in a high growth market.

“Being online, you have the ability to be a bit more agile. We’re lucky to be in a space where we don’t have to consignment-buy fashion, so we’re not hedging any bets on what might be in fashion or what might be out of fashion. Where we need to be smart with our buying would be around what might be the hottest products,” he told IRW.

Last week, the online retailer saw a peak in electrical goods bought, not normally seen apart from Christmas trading, with its average spend or cart value up 10 per cent.

MyerThis points to seasonal holiday items. Instead of being driven by bargains or more traditional gift options such as chocolates or flowers, consumers are seeking more refined gifting options. It makes sense as Valentine’s Day is associated with showing affection and let’s face it, impressing a special someone.

There’s precedence here, with the recent celebration of Chinese New Year a case in point, with China’s middle and high-income consumers opting for luxury items over the traditional cakes and sweets. Think more designer handbags as opposed to a box of Lindt balls.

Fflur Roberts, head of luxury goods at Euromonitor recently wrote that any festivity is an opportunity for luxury brands to make a profit, particularly as global wealth increases, consumers will increasingly be looking to spend on higher ticket items.

“While, of course, gifting is a major driver for luxury sales, with Christmas, Valentine’s and New Year featuring high on the list, in recent years we have seen a huge increase in ‘self-gifting’ with Singles’ Day proving to be a major opportunity particularly for the jewellery market,” she stated.

That old chestnut of understanding your customer comes into play. Patten said Ry.com.au segments its promotional strategies into targeting either repeat purchasing consumers or gifting ideas – and it’s paying off.

“It’s the trust factor from customers. If you’ve been buying shampoo successfully from us for the last five years, you can then show the customer something new and make them consider gifts from you, the trusted retailer.”

Early February sales show that Ry.com.au has had weekly year-on-year growth of 50 per cent on last year.

James

Ry.com.au has had weekly year-on-year growth of 50 per cent on last year.

Sourcing for these ‘one off’ events can be a headache for retailers, particularly if the returns are poor and consumers rein in the purse strings for what is essentially nothing more than a marketing event that plays on human emotions.

Patten said with next day delivery now a consideration for online retailers, there are a range of factors to consider. Buying and marketing leads may clash, but logistics are the paramount factor in keeping promises to the all-important customer.

“Electrical items are more expensive items, so if you need to hold 1000 more SKUS to make sure that you’re going to meet the demand, even the day of the week that Valentine’s falls on is important, because we need to move so fast with 24-hour, next day delivery,” he said.

With Valentine’s Day falling on a Tuesday this year, stock would have had to arrive and be ready to go on Friday the previous week.

Given the logistical challenges and ‘hit and miss’ nature of ‘hallmark holidays’, perhaps less is more in today’s retail scene, though with a few well-aimed products aligned to a company’s proposition and strategically marketed, the opportunity for profitability exists. Maybe Myer’s low key approach will pay dividends.

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