Retail authority Alicia Esposito shares her formula for boosting sales this holiday season.
When Alicia Esposito transitioned from the fast-paced world of music journalism to the retail beat a decade ago, she entered the industry at a transformative juncture.
“We really started to see the rise of flash sale sites, couponing sites, social media, and it just gave me this lightbulb moment that I had the chance to participate in an exciting evolution in the industry,” she says. Esposito is the vice president of content for Retail TouchPoints and host of the Retail Remix podcast.
Today, retail stands at yet another major pivot point. Years of spectacular eCommerce growth during the COVID-19 pandemic have subsided, causing many retailers and e-tailers to take a fresh look at their plans for the 2023 holiday season.
"We are seeing a bit of a stabilization and not as much growth as in years past. But looking at the year-over-year trend line… it’s still growth."
Alicia Esposito
VP of content, Retail TouchPoints
Esposito discusses ways that small and midsize retailers can zero in on their target audience and how they can use technology to predict where customers’ wallet share is going this season.
What are the top consumer-driven retail trends?
Retail, Esposito says, is embedded in almost everything we do as humans.
“[Retail] drives who we interact with, the technology we use, and even the cultures and communities we belong to,” she says. “It’s a really interesting intersection of behavioral and traditional psychology.”
So, perhaps not surprisingly, it’s retail consumers themselves—and their evolving reaction to numerous changes over the past 12 months—that are keeping retailers on their toes this holiday season.
Economic headwinds and inflation are affecting customer loyalty
First, Esposito says, retailers must understand inflation’s impact on consumers. The rising cost of groceries and nearly every other type of product has created new cost-of-living pressures for many families.
“The consumer is going through so much right now,” Esposito says. “They’re trying to get their footing.”
Esposito says changes in the macroeconomic landscape also present new challenges to customer loyalty. Being transparent with customers about inflation-related price increases is a complicated challenge for retailers.
Capterra's Retail Inflation Survey confirms this: Retail leaders that informed customers of price hikes were more than seven times more likely to see an increase in unit sales, compared to those that raised prices without informing customers. However, they were also five times more likely than non-informers to see increased customer attrition.*
Retailers should consider their unique customer relationship dynamics to determine if and how they want to communicate price hikes, and expect some turbulence as consumers adjust to price changes.
Shifting consumer preferences are hard to predict
From a supply chain perspective, brands and retailers are still trying to better understand consumer behaviors. In past holiday seasons, brands would use Amazon’s Prime Day to identify potential end-of-year shopping trends. But this year, it’s not as cut and dried.
Results from the October iteration of Prime Day indicate that while overall sales were their highest to date, many consumers spent the most money on essentials, such as protein powder and batteries.[1]
As for demand in other categories? That’s where a retailer’s tech stack can make a difference between holiday season success and failure.
“Retailers and brands of all sizes—even small businesses—need to use all the tools at their disposal—especially the data they have about their consumers—to gauge trending patterns and understand what customers are searching for this season,” Esposito says.
Taking the long-term look at holiday retail
The consumer mindset often changes once the holidays arrive. Shoppers are mostly looking to buy for others instead of themselves. This year, their lists will be a bit more focused, and they may wait longer to make a purchase as they search for the best deal, Esposito says.
Yet if retailers focus on these short-term wins, they’ll do so at the peril of long-term gains.
“It’s time for brands to think more creatively about not just how they’re going to get that immediate conversion, but how they can bring consumers into a long-tail journey,” Esposito says.
The holidays serve as a prime opportunity for giving and receiving and for brands to break through and find new loyal customers for life.
3 opportunities for small retailers to win the holiday season
While small and midsize retailers don’t have the giant budgets of enterprise brands, they can take advantage of the changing consumer tides and use technology to claim their share of holiday profits this season. Esposito identifies three prime opportunities:
1. Elongation of the holiday season
Traditionally, the holiday season includes all sales that retailers make in November and December. Today, however, some might argue that the holiday season starts with Amazon’s summertime Prime Day and continues into January as shoppers finalize their holiday returns. This brings a tremendous potential upside for retailers that adjust their marketing calendars accordingly.
In fact, 49% of retail SMBs in Capterra's Annual Holiday Retail Preparations Survey said they would launch holiday deals by September.**
“I’d encourage small and midsize businesses to start subtly dripping in holiday messaging in mid-to-late fall and early winter,” Esposito says. “Consider the timing of new product drops that could make for the perfect gift. Create experiences that can build a drumbeat of buzz and awareness as the peak of the holiday season comes to light.”
Then, use the results of those holiday social media, email, and SMS campaigns—and any early customer feedback—to adjust your promotions based on data.
“Agility is an SMB’s unique advantage—so don’t be afraid to change things up as you go.”
Alicia Esposito
VP of content, Retail TouchPoints
2. Convergence of community and commerce
Great products are only one part of a winning holiday formula for retailers. An equally important—yet still often overlooked—part of the customer experience is finding unique and valuable ways to gather your community around your brand.
Here again, small and midsize retailers are leading the way. They’re hosting holiday cooking classes live on Instagram and sharing branded Spotify playlists.
“I’ve even seen small businesses do holiday pet portraits,” Esposito says.
What’s the overall goal with these initiatives?
“To bring your community into your space and build excitement and authenticity by encouraging them to communicate with you and with each other,” Esposito says.
Video commerce is rapidly emerging as another vehicle SMB retailers can leverage. Unlike live streaming, which occurs on social channels, video commerce typically is embedded within a retailer’s website, and then amplified across social media, making it an integral part of a customer’s overall shopping journey. These videos often feature an influencer or brand team member demonstrating products. Tiles alongside the video let users drill down into detailed product information in real time without stopping the flow of the video, facilitating impulse buys.
3. More ways to tap into consumer insights
Today’s consumers expect highly personalized customer experiences. This is reflected in Capterra’s holiday retail survey, where 57% of retail SMBs say personalizing the customer experience is a high priority for the next 12 months.
Yet gathering the data to inform such personalization used to be out of reach for many small retailers that couldn’t afford sophisticated customer experience management platforms and other digital tools.
Social media, however, has democratized customer insights. Accordingly, small retailers today can scan their social feeds, review customer feedback, identify trending topics, and use all of that data to create bespoke experiences that their customer will adore.
“They’re using their platforms to simply ask questions—what do consumers think about the brand, how are people using our products, what do they want to learn, see, and buy from the brand,” Esposito says. “It will be interesting to see how brands will activate these insights during the holiday season.”
3 helpful technologies and considerations for implementation
Retailers can set themselves up for added holiday success with a unique combination of existing and emerging technologies. Three that Esposito is watching intently this year:
SMS messaging: Instead of using SMS to push deals and coupon codes, retailers should consider its potential as a communication channel for customers. “Many SMS platforms are adding conversational tools with automated messaging that help answer customers’ questions through text and thereby improve customer service,” Esposito says. “SMBs in particular have a unique opportunity to tap SMS to send targeted messages that focus on being helpful and building relationships, not just driving conversions.”
Social commerce: TikTok Shop, which launched in September, is the latest example of a major social media platform enhancing its social commerce capabilities. Retailers should leverage the deeper level of analysis and insights from these platforms to optimize their advertising campaigns.
Generative AI: While still coming of age, generative AI is already proven as an enabler for creativity and efficiency. Small brands with limited resources can use AI-powered solutions as a starting point for creating content that will convert. Capterra's 2023 Retail AI Security Risks Survey reveals that 44% of retail SMBs will use generative AI to support their holiday retail strategies. Their top use cases for AI this season include generating marketing content and personalizing the customer experience.***
Esposito shares three top considerations for implementing these and other technologies into your tech stack:
Know that there is no silver bullet solution. It’s up to each individual retailer to choose each technology thoughtfully and strategically in order to spur growth. Test solutions based on what your customers and employees need.
Aim to collect first-party data. Demand for personalized experiences is still strong. In fact, Capterra's AI survey found that 87% of U.S. online shoppers are willing to share their preferences with a retailer's AI tool in exchange for personalized product recommendations. When you can collect first-party data, you can create a more robust picture of your customer.
Be wary of the “buzz.” It’s easy to get caught up in new trends. But before you do, always keep your customers in mind. Consider whether your solutions will deliver on your customers’ expectations so you can optimize your technology investments and make the biggest impact.
Advice for retailers this season (and next)
The 2023 holiday season may not deliver the meteoric rise in sales that it did just a few years ago, but it’s important to recognize that even modest growth is still a step in the right direction. To take your holiday sales to the next level, Esposito says SMB retailers should:
Understand the impact of inflation and supply chain pressures on consumer behavior
View the holiday season as an opportunity to turn one-time shoppers into loyal fans
Think beyond transactional tactics by fusing commerce with community
Experiment with video commerce
Optimize SMS and social channels—and generative AI—for maximum benefit
By taking these steps, small and midsize retailers can go toe-to-toe with retail giants while creating truly unique experiences for their customers.
For more Capterra resources for retailers, check out the following pieces: