As you put the finishing touches on your Black Friday Cyber Monday campaigns, how your company is handling inventory is likely a key component.
Join Sarah Cascone and retail industry veteran and marketing expert Mark Friedman as they discuss logistics, profit margins, and how retailers are holding on promotions to ensure they are able to provide customers with the best experience.
Sarah: Hi, everyone. Welcome back to another episode of Coffee & Commerce. And welcome back to Mark Friedman, who is joining me for the second time on the series. This time, Mark is joining to talk with me about the most prevalent headline: inventory. Mark is a 30 year industry veteran, having led marketing and ecommerce teams at brands like Steve Madden and Brooks Brothers. He now serves as the interim VP of eCommerce at Eddie Bauer.
Thanks for joining me again, Mark.
Mark: Thank you for having me, Sarah. Nice to talk to you again. Hope you’re doing well.
Sarah: Absolutely. So we know a big concern for retailers this holiday season is inventory. How have you seen brands trying to manage?
Mark: Well, I think it’s interesting. I think many brands have had to deal with some semblance of supply chain issues over the years perhaps by their own doing, you know, they ordered late, they had winners and they needed to try and chase them down.
In this business you’re always chasing, but I think what we’ve got going on right now is the supply chain has still not come back. There’s still many plans throughout the world, manufacturing facilities throughout the world that are working on short staff. And then you’ve got the issues of actually getting the goods from off shore wherever you’re manufacturing them to onshore. We’ve heard stories about the ports in LA, et cetera, having six or eight week delays. So I think what businesses are doing frankly, is they’ve got less inventory to sell. Many of them had planned to have less and now they’re just delayed. So the need to be as promotional to drive top line just hasn’t been there quite as much for many businesses. Consequently what’s happening is I think you’re seeing less promotion which is meaning that many businesses are seeing higher margin rates. And in many cases, just higher margin dollars. So that’s a good thing from a bottom line perspective, but we’re also trying to always manage top-line and get growth there.
And I think that top line is a struggle right now.
Sarah: Yeah, it’s an interesting point on the margins. That’s a healthy shift probably for retail. So how are you seeing retail leaders allocate those excess dollars from those margins? What are they doing with it?
Mark: I think it runs the gamut. There’s some businesses that are taking all of that margin benefit that they’re getting and putting it to their bottom line. Some of them are reinvesting those dollars in head count. We’ve seen this huge shift. Especially in digital marketing, direct marketing, in a lot of the ecommerce pure plays, we’re seeing this shift in adding to heads, in some cases people not wanting to work in locations or for companies that are requiring them to be on site and trying to find those companies that are willing to have them be remote.
So you’ve seen those dollars go into headcount. You’ve seen those dollars go to bottom line. You see those dollars actually go into advertising. And in some cases, maybe more branding, more brand awareness things, things that many businesses want to do, but because it’s not as easily measurable, they sometimes struggle biting the bullet to do it.
It could also be in the form of testing some channels that they have not tested before. Maybe you’ve not done brand awareness and try to use over the top TV, OTT, or you haven’t had a TikTok strategy or Snapchat strategy, so I think you’re seeing some of that as well.
And then I think you’re also seeing technology get a piece of these dollars. You hear a lot about CDPs, customer data platforms. Businesses, if they have had something like that before, to help them through unifying the data throughout their business, from a customer perspective, they might be investing in that.
I was just reading something before our call, there’s a big cosmetics, beauty brand and they’re doubling down on big dollars that they have already spent to get speedier delivery to customers, whether it be curbside pickup and expanding that, doing more on buy online pickup in store, trying to navigate the waters of a tough supply chain and delivery chain by trying to do more same day delivery.
So all these things that perhaps we did not invest in over these pre-pandemic years is getting a lot of that extra margin.
Sarah: For sure. I see another way that brands are getting creative with their investment dollars and their marketing strategies in general are, and this is related to some of your comment around being able to get that complete view of the shopper and accessing that data, really getting a deeper understanding of the preferences of their existing shoppers so that they can facilitate better product discovery on line to help impact that top line revenue you were talking about. This way, then can get more of that ecommerce revenue to the door by surfacing products that shoppers may not have realized they were even interested in.
So I am seeing that in addition to testing new channels and testing new ways to leverage the data. But I’d love to hear from you: when do you think all of this is kind of going to settle back to normal with regard to these inventory changes and supply chain issues?
Mark: Let me just make one comment, Sarah, because I think you hit on a really good point. The other uses of the data I think are really important. You’re seeing investment in personalization and segmentation on this. You’re seeing businesses spend more time and money on conversion rate optimization. Once we get the traffic there, are there other things that we could be doing, even simple things to try and seek out some additional sales as far as timing goes. I think it depends on the vertical that you’re in. But I’ve listened into a number of calls both from the manufacturer side, I have some friends that actually are in the shipping space, the shipping industry from a forecasting perspective, and then obviously on the brand side and generally speaking people are not thinking this is going to clear up for at least another year. So the buys that brands would be making for spring of, I guess it’s ’23. Maybe it clears up then, but it’s a real challenge and we talked about this, you and I, it’s not just the supply chain of getting the products into your DC, or to your stores. It’s actually getting your packages out to consumers.
If I see one more email or one more alert from a retailer telling me to order early for the holidays, because they can’t guarantee what UPS, FedEx, or whomever else are going to do with their shipping capabilities. So you’re seeing, I think, this movement to, “Hey folks, shop now while we have the inventory, while we know we can get you your package.”
It’ll be interesting to see what happens over Black Friday and Cyber Monday to see if we steal some dollars earlier in the season.
Sarah: It’s going to be an interesting season to see what happens and I think this is going to be the status quo for a while. So it’s just a matter of understanding what are the ways in which marketing and ecommerce teams can kind of mitigate the current situation. I really appreciate all of the insight, as always. I know you spend a lot of time and have a great network to really see the full picture of what’s happening here. So thanks for sharing Mark, and thank you for everyone joining Coffee & Commerce.
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