Consulting Insights

Marketer’s Guide to Holiday 2021 | Edition 6: Overcoming Holiday Supply Chain Challenges

Challenges throughout the global supply chain, from factory closures to increased transit times, have driven inventory volumes for US retailers to a historic low. As marketers head into peak season, they must be ready to shift strategies in real-time in order to drive growth and maintain customer trust. Here’s what our experts recommend. 

Inventory volume may be low this holiday season, but customer demand is expected to grow between 5-9%, leaving many marketers wondering how to adapt.1 In order to overcome these supply chain challenges, which may persist well into 2022, retailers’ actions must be curated to their specific obstacles and holiday strategy – taking into account business implications for each challenge and recommended actions. The below chart provides several recommendations for implications likely to occur across supply chain segments.

Marketers should focus on crafting an agile holiday strategy that is right for their industry and inventory position with robust contingencies amid unprecedented supply chain challenges. As customers are continually disappointed by low inventory or shipping delays, there is an opportunity to differentiate by providing customers with a positive experience with your brand!

What Should Marketers Do?

Here are three steps every marketer should take into account when preparing for and executing during holiday 2021.

1) BE INFORMED

Ask these questions and determine a plan for answering unknowns. Across Ovative clients we are asking these same questions and tracking the key themes we are hearing back. Across our client base, clothing retailers are the most impacted by current supply chain position with many citing that factory closures and transit times could cause up to 40% of inventory to be missing for holiday.2  

  • How do your inventory levels compare against previous holiday periods for key categories and products?
  • How do you identify and target the most valuable customers with limited inventory?
  • When and where should you invest in paid media if you expect inventory shortages?
  • How will you manage your site for low inventory, out of stock issues, and shipping delays?
  • How flexible is your holiday marketing budget (e.g., by channel, category, etc.)?
  • How will messaging and creative shift as inventory is depleted across channels?
  • How are you monitoring performance of channel, campaign, and product to flag out of stock or inventory issues?

2) PREPARE

Take these steps to set your team up for success. Across Ovative clients, the top priorities in preparing for holiday 2021 supply chain challenges are increasing communication across teams on inventory position and remaining flexible in budgeting.2 

  • Engage with your Merchant teams weekly to learn where inventory stands throughout holiday and facilitate open communication across functional areas (merchandising, logistics, and marketing) to develop your media strategy
  • Be prepared to transition to store driving media tactics (e.g., LIAs) as online inventory and delivery times shift
  • Create a flexible budget accommodating of shifting customer behavior and inventory levels and create multiple scenarios for how varying inventory levels will impact revenue during the holiday period
  • Evaluate the health of your customer file (understand the value and trends of new vs. existing customers)
  • Set appropriate EMR targets taking inventory shortages into account
  • Create multiple versions of creative to select when inventory changes, especially for promotional campaigns
  • Update site messaging to reflect fulfillment delays and consider driving traffic to PLPs instead of PDPs

3) EXECUTE

Consider these channel tactic recommendations to win from our channel experts at Ovative.

PAID SOCIAL

  • Prepare text-only back-up creative options to run if the inventory featured in images is delayed or unavailable to avoid poor customer experience that will impact conversion rate.
  • Align on “Out of Stock” definitions and refresh cadence of your platform feeds to ensure products being advertised accurately reflect what is available on site.
  • If New Arrivals inventory is broken and is typically a strong traffic and revenue driver, consider featuring a deeper discount in non-dynamic campaigns in attempt to offset revenue gap. 

PAID SEARCH

  • Connect ads to real-time inventory data and ensure product feeds are updating regularly to ensure dollars are being spent on only in stock items and prevent consumer frustration with ads pointing to out of stocks.

AFFILIATE

  • Reduce last minute changes to promos and holiday messaging by creating a more generic or side-wide promotional and messaging strategy.
  • Encourage early shopping and gift card purchases with inclusive commission strategies and partner marketing efforts.
  • Let partners know of promo changes and inventory concerns as quickly as possible so they can adjust as needed and minimize impact to consumers.

TRADITIONAL

  • Secure inventory as early as possible. Most stations have early log deadlines because of all of the holidays. The demand for holiday specials is much higher for many brands and there is very little inventory, so those brands willing to spend more are more likely to secure the programs they want.
  • Have spots and creative ready in advance as to not miss any log deadlines, which are earlier and different because of the holiday.

DXO

  • Display local store inventory availability on product pages so customers know where to find what they are looking for.
  • Ensure sorting of product listing pages dynamically elevates top sellers that remain in-stock while burying products that have fallen out of stock and are unavailable for purchase.
  • When products are out of stock, provide clear messaging on dates when inventory is expected to be available and offer customers the option to sign up to be notified via email. 

MEASUREMENT

  • Proactively align budget and media investments to inventory expectations, heavying up in periods where there is inventory replenishment and pulling back in periods of low-inventory if needed to support higher opportunity time periods.
  • Explore opportunities for more mid-upper funnel investments during lower inventory to support lower-funnel audience sizes and efficiency throughout the season and post-holiday with replenishments.

Marketers can overcome the supply chain challenges impacting this holiday season as long as they remain focused on agility, contingencies, and maintaining consumer trust. Building trust with the consumers now will deliver longer term returns. While Holiday 2021 is likely to be the most dynamic time period, these practices will remain relevant into 2022 and these steps will help strengthen ongoing marketing strategies that build trust and loyalty with your customers. For more on holiday preparation and execution, download our Marketer’s Guide to Holiday 2021 or connect with us.

Ovative Group is a digital-first media and measurement firm. We bring together the best of media, measurement, and consulting to enable an enterprise approach to marketing that increases our clients’ profitable revenue, strengthens their customer base, and creates sustainable competitive advantage.

SOURCES:

1 | Sources: U.S Census Bureau, NRF, Bloomberg

2 | Ovative Client Data


Patrick Shumaker

Senior Manager, Consulting

About the Author

Patrick Shumaker is a Senior Manager on the Consulting team at Ovative. He brings a customer-first approach and passion for solving complex business problems to all the work he does. Patrick has 10+ years of retail experience which includes consulting for startups and Fortune 50 companies and various roles at Amazon.

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