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The correlation between stimulus payments and retail spending is also evident when we look at the increase in traffic across the e-commerce and retail sectors. Data from SimilarWeb shows that levels of online traffic in August actually exceeded Christmas levels. Between lockdowns and stimulus payments we are continuing to see Christmas levels of revenue across the majority of our clients and traffic volumes continue to increase.
Benefitted masses
Jobkeeper payments have actually increased the wages of a number of lower socioeconomic groups and Covid-boosted Jobseeker payments have increased the spending power of those 3.28 million Australians who are looking for work or wanting more work. I have heard anecdotally that some retail stores in lower socioeconomic areas are thriving as people have more time and more disposable income from early super withdrawals.
One upcoming sale, which I think will give an indication of what we can expect this Christmas season to look like, will be the performance of Vogue’s online shopping night, which took place this week. However a recent report by Equity Economics shows that, in Victoria, women have been disproportionately affected by the lockdown in comparison to men, which could indicate that this event may not be as successful as previous years.
Some commentators have speculated that this year’s Black Friday and Cyber Monday sales will be even bigger than last year. It has been estimated that in the six weeks leading up to Christmas, 38.2 per cent of all that revenue in Australia and New Zealand will be generated in the Cyber week, starting 27th November. As frustration with the state of the world increases and the fact it will be almost nine months since Aussies have been able to travel abroad, and months since seeing family and friends in some states, I predict spending during this period is going to increase significantly year on year.
A change is coming, but I expect the larger impact of this will actually be felt in Q3 next year after the hangover of Christmas sales has passed and the tightening of belts will really kick in with further reductions to government initiatives, such as the end of the Jobseeker supplement ending.
Planning ahead
It’s going to be hard to foresee exactly how the next three to six months will go, but there are some things retailers can do to plan for what may happen.
Firstly, expect the unexpected. Accept that you do not know how everything will pan out and foster an agile mindset to your approach. Streamline your decision making process and reduce barriers for changes to be made quickly.
One way to plan for the future is to create a war chest now, which can allow your business to pivot if and when the market does change. I think it’s fair to say that’s going to happen again to some degree. One CEO I spoke with recently mentioned that this change has already been implemented in the business after it took weeks to pull a contingency plan together in March. So when Melbourne lockdowns took place, they were in a better position to act within days, not weeks.
Get actionable data insights
I’ve identified how consumer behaviour has changed this year and witnessed the rapid digital adaptation for many brands. Relevance is more important than ever before and one of the biggest challenges (and opportunities) for brands is to keep up with the market. Knowing what is trending and when is essential in staying ahead of the curve. I am seeing historical poor performing search terms generating positive ROIs as a new wave of online shoppers enter the market changing the search landscape.
There are some amazing tools that you can use to access this information. You might be surprised at how much customer data you already have at your fingertips, enabling you to stay in tune with evolving customer needs. Google Search console, keyword reports from your paid ads and trending products within google shopping can provide some great insights into search trends. Utilising your CRM is also an amazing way to gain insights, reviewing your email content, subject lines and customer purchase behaviour will help you prepare for the holiday season.
Discount for the right reasons
Unless it is part of your business model, don’t discount all the time. There’s really no need. Those who are constantly discounting are doing their brand a disservice right now. We’ve seen that some companies are running out of stock before they can ship more into the country, so with consumer spending still higher than usual, it’s not necessary.
The Christmas sales season is approaching though, so ensure you have a robust customer acquisition plan in place. That is where discounting can start to develop long-term rewards. Now is the time to enhance your first party data as Google is ending 3rd party cookie data availability next year.
Failure to prepare
According to a report from McKinsey, consumers are already showing their desire to buy more Australian brands. Demonstrate brand value where possible, as consumers are responding more to brands with a positive social impact. Don’t be afraid to build brand equity by showing the positive impact you have had on the community. It is not always about direct ROI. We continue to see the shift in consumer behaviour where brand building, digital communities and connections continue to grow. #supportlocal continues to trend and shows no sign of slowing down. Connect with your customers and become a brand to follow, and not just a place to make a purchase.
Despite the hardships of this year there have been a lot of positives. Uncertain times and unprecedented challenges are an opportunity to expose gaps in your marketing capabilities and make your digital presence stronger than ever before. Businesses have learnt to adapt and shift strategies and as a result, the digital landscape and maturity has progressed ten-fold as we have all been forced to change. The online market continues to grow, and despite the concerns around predictability in the market, right now, we are seeing some incredible growth for e-commerce that looks like it will continue throughout the Christmas period.
Chris Lockwood is client strategy director at Alpha Digital
