Retailers’ Success Could Come Down to the ABCs This Year

With all due respect to Alec Baldwin’s legendary “Always Be Closing” monologue from the film Glengarry Glen Ross, the ABCs of holiday shopping have gotten an upgrade this year in response to the unique mix of economic conditions currently roiling consumers and businesses alike.

Just as tight-fisted shoppers and households will have to make deeply personal spending decisions as to what they will (and won’t) buy this year and how they will pay for it amid dwindling available credit, retailers are also adjusting to the times in an effort to meet customers not only where they are, but how they feel.

While an unprecedented bout of promotional activity has flooded the space for weeks already, three new nuggets of industry insight from PYMNTS’ research published in just the past week have shown how retailers and brands can boost their odds that browsers will become buyers in this most challenging year via a trio of trends we’ve labeled A, B and C.

A is for ASP

Even when the economy is booming and consumers are eager to splurge, the final six weeks of the year are filled with sales and promotions and special one-day events.  But this year, literally every brand, from Amazon to Zara, is pulling out the stops to tempt shoppers and jump-start the holidays.

But in order to keep the “A” in ASP (Average Selling Price) as high as possible, retailers are increasingly using AI-powered price optimization solutions to help zero-in on the right price at the right time.

“Savvy retailers with the best analytics should focus heavily on improving their price perception through winning promotions, appropriately timed markdowns, and a strong offering of high-value private label products,” said Matt Pavich, senior director of retail innovation at Revionics, an Atlanta-based machine learning solution provider that uses global data to drive pricing, promotion and markdown decisions that was acquired by Aptos two years ago.

“Retailers will absolutely need to focus on their price perception and provide consumers with great value and offers on the items that they care most about across all channels,” he added, noting the need for surgical precision to meet the demands of budget-conscious consumers.

B is for BNPL

Buy Now, Pay Later may just be the season’s “gift that that keeps on giving” to quote Cousin Eddie from the holiday classic “Christmas Vacation.”

While Eddie was referring to a Jelly of the Month Club subscription, new PYMNTS research shows that the honor may now go to the continued uptake and expansion of BNPL, the payment method that continues to outgrow and steal share from other financing methods by connecting with more retailers and more merchants to enable an easier purchasing experience for more products.

While not without its challenges, the growth and demand for BNPL continues to dominate the narrative, the new report from PYMNTS and Splitit, “Buy Now, Pay Later: the Merchant’s Guide to BNPL’s Revenue Boost,” found, including stats that showed more than half of retailers cranked up their conversion rates and boosted brand awareness when they offered customers easy BNPL plans.

Add in the upselling effect that it can bring by encouraging customers to trade up to premium products, and the benefits of BNPL for retailers this season look clear.

C is Card Credentials

PYMNTS has already established the importance of the checkout experience, with findings that show for 90% of customers, any of a dozen points along the path to payment can not only trip up a transaction, but put off a customer for good.

Delving deeper into the subject, the just-released report, “How We Pay Digitally: Stored Credentials Edition,” a collaboration between PYMNTS and Amazon Web Services that surveyed 2,102 U.S. consumers, found that one key area of conversion shot up when merchants took one particular action: convincing consumers to store their payment credentials.

As the report found, while 56% of all consumers already prefer the speed and convenience and time saved by not having to re-enter a 16-digit credit or debit card number and the ancillary information that goes with it, nearly half still expressed concerns about security.

In order to convince these credential storing holdouts to do so, and in turn bring retailers the benefit of higher conversion and frequency rates to go with it, the study found that discounts of just 5 or 10% could significantly move the need to get consumers to keep their payment info on file, with up to 84% of certain tech-oriented demographics being persuaded to do so with that little nudge.

While no one solution will work on every consumer in every situation of market environment, at a time when every sale matters and every little bit helps, the ABC’s might just be the difference-maker this year for retail’s busy season.

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