Cash back incentivizes shoppers in the "new nimble"
The last 10 months have shattered typical planning methods for marketers, especially in retail. None of us had ever been through a pandemic before, so the media has branded this almost-post-COVID-19 era as “the new normal,” which is apt enough. At the same time, brands might instead find it more fitting to refer to it as “the new nimble.”
In October, there was justifiable buzz around Amazon Prime Day and the flash-sales campaigns run by the likes of Guess, Old Navy, Walmart and others. These efforts were meant to jump-start holidays sales and make up for some of the lost revenue from the 2020 lockdown. While Amazon Prime Day achieved a big revenue spike, we won’t know how other retailers fared in October until their Q4 earnings are released.
It wouldn’t be shocking if some of those players only saw modest gains due to broader trends. At a high level, the pandemic has catered to, and enhanced, today’s consumers’ on-demand mindset. Direct-to-consumer retailers like Warby Parker, Glossier, and Untuckit have helped create this way of consumer thinking with their evergreen product lines. Consumers can now buy things whenever they want them—no matter what time of year it is. This “un-seasonal” reality spreads sales out over the calendar and makes being nimble incredibly important.
To be able to meet these expectations, brands need to use their data more astutely than ever and find ways of meeting customers where they are at. Retailers should make offers that not only afford customers of the products they want but also put cash back into their wallets during these tough economic times. This strategy will lift sales in Q4 and early 2021.
The fifth quarter
For years, in January, with the holiday season behind them, retailers hit a reset button and started planning for the next 12 months. There’s no such reset now.
To maximize sales, retailers need to think about Q1 not as the beginning of next year but as the continuation of what they have been seeing in October, November and December. From January through March, it is going to be almost like a “Q5” for retailers. This trend did not come out of nowhere—as we saw the pandemic accelerate existing trends in other industries, retail was no exception. Pre-COVID-19, it was already true that December online retail traffic and sales were moving into January, likely because order returns beget replacement items that have to be ordered and savvy shoppers use their gift cards after prices go down, post-New Year’s.
This reality smashes old planning models to bits. Evolving with the new nimble is the only way to piece together a strategy that will work.
Retailers should look for micro-signals in their data and also consider how consumers’ spending behaviors have changed. The pandemic has created economic uncertainty, and some shoppers will be spending less than usual, and others will be slamming the brakes. At the same time, nearly half of Americans will be filling their shopping carts like they would during any holiday season. These three groups of consumers should be kept in mind and applied to marketing intelligence and messaging across channels.
Indeed, retail marketing strategies right now should combine granular intelligence and the larger economic forces. Cash back should be a part of that mix when retailers spend their ad dollars to get in front of consumers to incentivize them to get shopping. Cash back should be part of the ad. And with the "unseasoning" of retail, there will be more room for "always on" campaigns like cash back year-round.
The last several months have raised previously unseen challenges for retail. Further, this quarter and the next one will likely blend together like never before, and it will require marketers to interpret what their customer data means against the broader landscape and then plan incrementally. It will force retail practitioners to be nimble in ways that are new and likely here to stay.