There are fewer than 100 days to go until the holidays. At a time when brands would usually be gearing up towards the busiest season of the year, supply chain shortages are wreaking havoc across the globe.
Brands from fashion retailers to car manufacturers are suffering from serious inventory shortages, putting a spoke in the wheels of many holiday marketing campaigns. In light of these challenging circumstances, how can brands manage consumer expectations? And what do supply chain problems mean for brand marketers this year?
Holiday Supply Chain Issues Causing Havoc
Normally, companies would be stocking up on product inventory to prepare for increased demand between now and peak holiday season. After all, brands count on holiday sales to generate up to 30% of their annual revenue. But these aren’t normal times.
COVID-19 outbreaks across Asia, labor shortages, and wildfires in Bangladesh have caused global supply chain issues, meaning delivery times are expected to be significantly longer and the prices of raw materials have gone through the roof.
Delayed cargo and higher freight prices are already causing headaches for marketers who are wondering what this means for their campaigns — and if they'll be able to meet consumer demand.
Even Top Brands Are Affected
Research by Deloitte revealed that nearly half of businesses say supply disruptions have increased their costs by 5% or more this year, while almost a third experienced a decrease in sales due to delays or shortages.
Even huge brands with strong supply chain networks aren’t immune. Nike has many of its factories in Vietnam and Indonesia, which are struggling to contain the Delta variant, leading to factory shutdowns and shipping disruptions.
Reduced inventory means lower sales, which will leave businesses of all sizes struggling to meet their business goals — even if they are a popular brand whose products are in high demand from consumers.
H&M can’t meet customer demand for their Autumn collection because of supply chain issues and is expecting sales and revenue to take a hit.
Nike cut its sales forecast following factory closures in Vietnam caused by the Delta variant.
Adidas is anticipating $600 million in lost sales in the second half of the year due to supply chain woes and is planning to increase prices.
Huge US retailers like Walmart and Target have seen gaps in shelves for key seasonal items.
Many companies are still playing catch-up from closures and lost revenue caused by the pandemic. Now, this comes as a real blow for businesses of all sizes who rely on healthy holiday sales to finish the financial year in good shape.
What Do Holiday Shortages Mean for Shoppers?
The ease of ordering online means that the journey products take from the manufacturer to the consumer is largely invisible. You click a button on your computer or phone, and a day or two later, your item arrives. Since the pandemic, however, it's become clear that supply chains are much more complex – something that consumers and marketers alike are only just starting to realize.
Traditionally, brands offer generous discounts around the holidays as part of a last-minute push to encourage consumer spending. Consumers have come to expect great offers on Black Friday, with many waiting until the end of November or beginning of December to net the best deals online and in stores.
This year, however, people may need to be prepared to pay full price to get their hands on in-demand products. And even then, the days of waiting until the beginning of December are over, unless they want to face empty shelves.
Holiday shopping can be stressful anyway, with shoppers under pressure to find the perfect gifts for their loved ones. So, delays and shortages are likely to add to the stress. Now more than ever, brands need to be there for their customers and make the shopping and gifting experience smoother.
So, what can businesses do to manage consumer expectations and run a successful holiday marketing strategy — despite the supply chain crisis?
How Should Brand Managers Approach Holiday Advertising?
With so many industries affected by a shortage of supplies, most marketers will be wondering how to manage consumer expectations this holiday season. While you don’t need to cancel your campaign or stop running your ads just yet, chances are you will need to do some things differently. Here are our top tips on how to make the most out of holiday marketing in 2021 and finish the year in a strong position.
1. Be flexible
As disruptions are likely, be sure to develop a backup plan in case you can’t get hold of the products you need for your end-of-year promotions. You don’t want to plan a big campaign for one key product, only to realize you can’t deliver.
So, start thinking now about the kinds of alternatives you can offer your customers and how to shape your messaging.
2. Start your campaign early
Encourage your customers to do their holiday shopping over a longer time frame and schedule your communication to begin a few weeks earlier than usual. If you are in a position to put on a special offer or annual sale, get it out there early with a well-timed email marketing campaign.
For example, rather than relying on Black Friday, the retailer Guess? live streamed shopping events in October to entice people into shopping before the main holiday season.
Many consumers will start researching and making purchases ahead of time, having wised up following delays and shortages last year. So your “early” communication will most likely be right on time for many of your customers. This is better for both sides, because if you can’t increase inventory, you can at least try to smooth customer demand and avoid a last-minute rush.
3. Set realistic expectations
Remind your customers of the value of your products and communicate any issues transparently and ahead of time, so that customers know not to expect last-minute details and understand why you are not able to offer special promotions.
Since Corona, consumers understand that businesses – especially small businesses – are struggling, so they are likely to be sympathetic and understanding so long as you are transparent. For example, if a product is currently out of stock and will not be available for two weeks, ensure this is visible on your website, so the customer knows to expect the delay before they place their order. This will help them to plan their holiday shopping and reduce any headaches and uncertainty.
4. Accurately predict consumer needs
Many retailers have stocked up on inventory early as they are worried about going out of stock. However, consumer habits are changing fast, making it difficult for brands to anticipate which products are going to be popular.
Around the outbreak of Corona, products such as toilet paper and hand sanitizer were suddenly sold out almost everywhere. To avoid running out of products that have suddenly and unexpectedly become popular, keep an eye on consumer trends and changes in shopper behavior — and make sure you know your target audience inside and out.
5. Offer the best customer experience
The holidays are supposed to be a joyful time of year, but they can be stressful as well. So, be mindful of what you can do to improve customers’ experience with you when gift shopping.
Whether that’s making the in-store experience special or offering your most loyal customers a free gift with their online purchase, making your customers feel special can go a long way towards smoothing over any friction caused by supply chain issues.
Final Thoughts
Pandemic-related supply chain issues and labor shortages are currently causing chaos across the globe. If your brand is affected, you can take some comfort in knowing that you are definitely not alone.
With some tweaks to your strategy, you can still expect to have a successful holiday season and run amazing campaigns. The most important thing is transparent and timely communication, so your customers know what to expect. Happy holidays!
