On this special episode I am thrilled to be sharing a full episode from my Conversations with CommerceNext podcast featuring Exclusive Holiday Research with Forrester VP & Principal Analyst Sucharita Kodali
Welcome to the The Voice of Retail , I’m your host Michael LeBlanc, and this podcast is brought to you in conjunction with Retail Council of Canada
On this special episode I am thrilled to be sharing a full episode from my Conversations with CommerceNext podcast featuring Exclusive Holiday Research with Forrester VP & Principal Analyst Sucharita Kodali
I launched the Conversations with CommerceNext podcast with my U.S. based partners to meet the top practitioners and thought leaders in the DTC & eCommerce marketing space, and explore both their tradecraft and share the learnings from their career journeys.
Now let’s have a listen to my podcast partner Scott Silverman as he introduces the episode with Sucharita, a frequent and popular guest here on The Voice of Retail
Thanks for tuning into today’s episode of The Voice of Retail. Be sure to subscribe to the podcast so you don’t miss out on the latest episodes, industry news, and insights. If you enjoyed this episode please consider leaving a rating and review, as it really helps us grow so that we can continue getting amazing guests on the show.
I’m your host Michael LeBlanc, President of M.E. LeBlanc & Company, and if you’re looking for more content, or want to chat follow me on LinkedIn, or visit my website meleblanc.co!
VP, Principal Analyst
Sucharita serves digital business strategy professionals. She is an expert on eCommerce, omnichannel retail, consumer behavior, and trends in the online shopping space. She is also an authority on technology developments that affect the online commerce industry and vendors that facilitate online marketing and merchandising.
In her research, Sucharita covers such consumer-oriented topics as eCommerce forecasting and trends, merchandising best practices, conversion optimization, and social computing in the retail world. She has also authored "The State Of Retailing Online," a joint study conducted annually with NRF.
Previous Work Experience
Prior to Forrester, Sucharita was the director of marketing at Saks Fifth Avenue, where she managed the customer acquisition, retention, and market research efforts for the $2 billion luxury retailer's online channel. Prior to Saks, she held management positions at Toys R Us, where she was a merchant in the Babies R Us division and a store manager in one of the company's largest toy stores. She also worked for the Walt Disney Company, where she developed and managed marketing plans for new business initiatives, including the Disney Stores, the Disney Cruise Line, and Club Disney.
Additionally, she was involved in the expansion of Cap Cities/ABC properties, specifically ESPN Zone, ESPN Magazine, and the Go.com network. She has written two nonfiction books and has contributed to BusinessWeek Online.
Education
Sucharita holds a B.A. in economics from Harvard University and an MBA from the Stanford Graduate School of Business.
Scott Silverman
An ecommerce veteran, Scott Silverman has been active in the industry since 1999 and is passionate about digital retail and the innovation driving the industry. Scott Silverman is the Co-Founder of CommerceNext. Previously, he spent 10 years as Executive Director of Shop.org where he launched the Shop.org Annual Summit. Scott co-invented “Cyber Monday” in 2005 and was the founder of Cybermonday.com in 2006, a shopping site that has generated more than $2.5 million for Shop.org’s scholarship fund.
Michael LeBlanc 00:04
Welcome to The Voice of Retail. I'm your host Michael LeBlanc. This podcast is brought to you in conjunction with Retail Council of Canada.
On this special episode, I'm thrilled to be sharing a full episode from my conversations with CommerceNext podcast, featuring exclusive holiday research with Forrester, VP and Principal Analyst Sucharita Kodali.
I launched the conversations with CommerceNext podcast with my US based partners to meet the top practitioners and thought leaders in the DTC in eCommerce marketing space and explore both their tradecraft and share for the learnings of their career journeys.
Now let's have a listen to my podcast partner Scott Silverman, as he introduces the episode with Sucharita, a frequent popular guest here on The Voice of Retail.
Michael Leblanc
Welcome to the Conversations with CommerceNext podcast. I'm your host, Michael Leblanc. This podcast is brought to you in conjunction with CommerceNext and presented by Bloomreach.
Scott Silverman
So, welcome everyone to season two of Conversations with CommerceNext, our sponsor this season is Bloomreach. So, thank you for their support.
This is going to be a different than our typical podcast where we sit down with an industry leader and get career and marketing advice. Although I think that kind of conversation with our special guests today would be pretty interesting.
Anyway, but today, we're going to be digging into some new research that CommerceNext conducted over the last two weeks focused on holiday 2021. And we surveyed 84 merchants and asking them about expectations on margins, promotional levels, what their optimism is around the holiday season. And as we all have been reading in the news, it's a very unique holiday season. And we're going to get into that in a little bit. But this is the second year in a row that we've done this, again, because we'd like to provide data to our community when things are not quite normal. So, I want to give a big thank you to the, all of the retailers that took the survey, we couldn't do that without you. We really appreciate you giving us your data and letting us look at it in aggregate. And I want to thank our partner Sucharita Kodali, who is the lead retail analyst at Forrester Research, and she is here to talk about the findings. We reached out to Sucharita a couple of weeks ago, and said what we wanted to look into some of these holiday issues. And Sucharita is always game for receiving interesting data. So, she jumped in, helped us with the survey helped us with the analysis. So, welcome Sucharita to Conversations with CommerceNext podcast.
Sucharita Kodali
Well thank you for having me, Scott. And it's always great to you know, spend time with, with you and Michael. So, thrilled to be here and thanks for inviting me to be part of the research process.
Scott Silverman
And always as I'm joined here by my co-host, our podcasting co-host Michael LeBlanc. So how are you, Michael?
Michael LeBlanc
I'm very well. Thank you. Thank you. Sucharita, we were saying off, mic. I think the last time you and I saw each other in person was at the Big Show in January 2020. So, it's great to great to see you virtually or otherwise. Nice to be here.
Sucharita Kodali
Right? It's like almost as if I'm, I'm you know, kind of in person with you.
Michael LeBlanc
It feels like it sometimes. Right? So, I mean, that's a good kickoff to our first kind of line of questions. The new un-normal, the un-normal world the post COVID, COVID world. Last year's holiday season, I think retailers were begging, borrowing, and, and not stealing space on anything that could get a package to a doorstep. They were calling up Santa seeing if there's any space on the red wagon this year. Again, we've got another interesting unusual, as Scott said, unique holiday season. Could you, could you talk a little bit about your observations of what has got us. What have led us here?
Sucharita Kodali
Well, certainly the pandemic continues in, in much of the country, there are still a lot of concerns with consumers going out and about. So, I would say that they're still that but, even aside from that, I think that the other issues are macro economics. So, there's of course, the supply chain issues. And what's different about the supply chain issues this year was that in the past, as you'd mentioned last year, it was usually a carrier issue. And we've been.
Michael LeBlanc
Yeah.
Sucharita Kodali
Complaining about carrier issues for as long as I can remember like that, that never changes.
Michael LeBlanc
Yeah.
Sucharita Kodali
And I think consumers typically have adjusted their behavior to accommodate for that, or retailers just basically budget that into their marketing plans and what they look to promote. But what's different this year is the rest of the supply chain, it's the forward part of the supply chain. It's the factories overseas, not producing enough for on time. There are the container ships, there's the trucking shortages, which are really global in nature. And that also is a segue to the other big problem, which is labor shortages. So, even the survey show case that there are, there were more concerns around labor shortages, particularly in warehouses and supply chain areas than in a lot of other concerns that, that retailers had. And all of that leads to inflation. There are other reasons, of course for, for inflation that don't that aren't as retail specific and you know, related to interest rates and.
Michael LeBlanc
Right, right, macro stuff.
Sucharita Kodali
Supply and you know, kind of shortages and a lot of manufacturing, a lot of B2B issues, that have led to inflation as well. But, but there's the inflation issue. And the inflation issue, interestingly, seems to have a big impact on consumer confidence, which doesn't make a (inaudible) there's a little bit of cognitive dissonance there, because the economy is doing pretty well. Otherwise, employment is, is relatively strong. Most consumers are, are pretty flush with cash because they spent the last year and a half saving.
Michael LeBlanc
Yeah.
Sucharita Kodali
More than they've ever saved. So, it is otherwise a fairly strong economic situation but, but the competence levels are lower than what you would expect. So, and you see that reflected and things like Biden's approval ratings, and, and whatnot. So, all of those things are just very unusual this year. Then in retail, there are other factors that are different. Amazon has a new CEO, if we were to even look back last week, interestingly, there was almost not a peep spoken about 11/11 Singles Day, which typically is like the story of November until Black Friday comes, comes along. And I think that there was like an article in the South China Morning Post. And that was about it, you know, there was just not.
Michael LeBlanc
Yeah.
Sucharita Kodali
A lot spoken about, about Singles Day this year. And, and the numbers were pretty lackluster, too. So, so, there's a lot that's different this year.
Michael LeBlanc
Well, there's a lot to unpack what an opening, what an opening volley in terms of the conversation. There is about 10 different directions, we could go kind of like the 10 different directions, I feel like, like all these issues are going, right? On the positive side, as you say, we've got this stockpile of consumer cash that's stored up from a lack of doing other things, unintentional savings that are at record rates, you've got inflation driving that. You've got, you know, this stockpile covering up the impacts of inflation, you know, if I pay an extra dollar, not such a big deal. We've got, you know, retailers pulling playbooks out from the 70s. What does stagflation look like, is stagflation happening next?
And I love what you're talking about in the supply chain. I was speaking with a retailer last week, and he said, you know, listen, we've got lots of product on order, we've got lots of stock. But for a lot of the promotional items, we just don't know when they're going to arrive, we would have had those long locked down weeks, if not months ago. Particularly the Black Friday, Cyber Monday deals that they do many, many, many months in advance. So, it's really created a dynamic. This isn't a supply chain podcast, though, it seems everyone in retail is talking about supply chain. It's more about the impacts on marketing. And that's what we wanted to dig into with this survey. It really kind of says, okay, all that being said, which was a great introduction, what is it that that some of the, the retailers came forward with in terms of how they're adapting, changing, or what they're doing to adapt to these yet again, unusual circumstances?
Sucharita Kodali
Well, the biggest thing that stood out to me was a relatively large number of respondents said that they were going to cut back on promotions during their key timeframes. So, there are really two types of promotions really, right. There is the shipping promotions, and then there's the.
Michael LeBlanc
Yeah.
Sucharita Kodali
Price discounts and the X off, X percent off of everything, or X dollars, if you spend.
Michael LeBlanc
Yeah,
Sucharita Kodali
Y dollars promote those kinds of promotions. And it sounds like both of those are going to be reduced pretty substantially. About a third of the respondents almost across the board said that they are planning on reducing their Black Friday, Cyber Monday promotions. They are planning on reducing even their December promotional volume, which I thought was really, really interesting, because these are big shopping time frames.
Michael LeBlanc
Yeah.
Sucharita Kodali
And usually.
Michael LeBlanc
Yeah.
Sucharita Kodali
For most retailers, their, their biggest days, especially for digital retailers. Those are it's Cyber Monday is almost, you know, which is, which is the brainchild of Scott, you know, is actually, you know, has historically been the biggest shopping day for most retailers. And it doesn't look like it'll be that way this year. Or if it is, it'll be a very modest increase over previous and over 2020. The other pieces, the number of retailers that said that they're going to cut back on shipping promotions. And from the survey, it appeared that at least 50%, if not more than that are going to cut back on shipping in some way. Now we are all (inaudible) of cutting back on shipping, whether it is the thresholds will be higher, the number of days that they're offering free shipping will be reduced. And that's a big deal, because we have known for years how important shipping is to surviving.
Michael LeBlanc
Yeah, yeah.
Sucharita Kodali
Conversion.
Michael LeBlanc
Yeah.
Sucharita Kodali
And they're doing all of this because they just don't have the inventory to support it.
Michael LeBlanc
Right.
Sucharita Kodali
And what is interesting is that to the point about, you know, kind of when is this product going to arrive? Well, it's probably going to arrive in January, and you know, or it's going to arrive in December. So.
Michael LeBlanc
Yeah, yeah.
Sucharita Kodali
I actually think that what will happen is what we may have missed with a Black Friday or Cyber Monday promotion is just going to be pushed out to January because you have two factors, you have both like the late arrival, but then.
Michael LeBlanc
Yeah.
Sucharita Kodali
You probably have a bunch of retailers that over ordered in the first place thinking that.
Michael LeBlanc
Yes
Sucharita Kodali
You know, we need to get this stuff and let's, let's just try to, you know, kind of overcompensate and hope that it arrives. And then when it doesn't arrive, you know, you end up with, with too much in, in January. (inaudible)
Michael LeBlanc
Yeah, I mean, as, as you say, retailers, who, who had the means to do so. And of course, the supply chain challenges favor larger retailers more sophisticated, more planned out from a supply chain perspective, you know, not everyone could rent a boat, their own boat, but, you know, I think the risk is did you get the right stuff? Did you make the right bet? We've got stuff, but is it the right stuff, because it's not the, the just in time.
And you know, one of the other interesting things that I was looking through the surveys is, is you know, encouraging consumers to shop earlier. And the idea of modifying the whole marketing plan is super, super interesting, even from a tactical level. Here in Canada, there's a lot of flyers, for example, print flyers, which have a long lead time, that's tough to manage. And I love your point about, you know, the, the post Cyber Monday post Black Friday, as you know, in the UK, and here in Canada, we have this great event called Boxing Day, which is actually the third largest event. And maybe that might be a net import into the US because merchants by the way, love boxing day because if you make any wrong bets, you got another kick at the can later on post, post holiday. What do you think? Did you see any, any of that reflected in the survey?
Sucharita Kodali
Well, interestingly, only 7% of the survey respondents said that they planned on having sales in Q1, I just think that they, they didn't have enough visibility to know how much inventory.
Michael LeBlanc
Right.
Sucharita Kodali
They're going to have. And to your point, Michael about like, even though large merchants, I mean, I think Walmart just released its numbers. And they have I mean they have their own container ships. And even they don't have the inventory that they need.
Michael LeBlanc
Yeah.
Sucharita Kodali
So, their inventory on hand numbers is lower than this time last year. So, so, I don't I think that this is, this is just systemic, and it's affecting everyone, including the largest retailers. And the smaller ones will absolutely you know, kind of have bear the.
Michael LeBlanc
Yeah.
Sucharita Kodali
Bear probably the, the biggest brunt of it, because they also don't have the stock gaps. They may not have the dropship, or the marketplace merchandise that could, could make this pop.
Michael LeBlanc
Yeah.
Sucharita Kodali
But to your point, about the post kind of December 25 holidays, traditionally, that is a huge time in general, like 10% of all of holiday sales happen between December 25 and January 1 anyway. So, the idea of more of that merchandise, being on sale for longer, I think is absolutely a logical outcome of all this, most of what is purchased anyway, on these big sale dates. It's not gifting, its purchases for self anyhow, it is usually.
Michael LeBlanc
Yeah.
Sucharita Kodali
Things that you were planning on buying for a house renovation or things that you had your eye on for, like a television, and (inaudible). Exactly. So, if the sale isn't available in November, people are just going to wait for when that sale is available. So, and if that happens to be in January or February, whenever the merchandise arrives, that's when the consumer will purchase. So, I think that that's, that's, that's almost an inevitable outcome. Unless somebody raised this the other day, which is like, well, maybe they'll just hold on to the inventory for next year, which is possible. We saw that through the.
Michael LeBlanc
Yeah.
Sucharita Kodali
Early part of the pandemic, as you heard a lot of retailers saying, oh, we're just going to hold on to the inventory. You know, because, you know, we'll just wait for another year.
Michael LeBlanc
Yeah.
Sucharita Kodali
Which I guess you can do when demand is low, but demand isn't particularly lower. It's just that the merchandise isn't there. And, you know,
Michael LeBlanc
I guess your season, you know, for seasonal merchandise. That's the playbook, right? I mean, the artificial Christmas tree arrived on you know, December 26
Sucharita Kodali
Yes.
Michael LeBlanc
There's no market for that tree. So, just put it you know, just put it in a warehouse it might.
Sucharita Kodali
There maybe a lot of that stuff sold at cost. You're right.
Michael LeBlanc
Yeah, or Raiders of Raiders of the Lost Ark style sized warehouse. If you're enjoying this podcast, please be sure and hit that subscribe button on your favorite podcast platform so you don't miss another great episode. We'll be right back with our interview with Sucharita Kodali from Forrester. Right after this important message.
Michael LeBlanc
Bloomreach is the world's number one eCommerce experience cloud empowering brands to deliver customer journeys so personalized. They feel like magic. It offers a suite of products that drive true personalization and digital commerce growth, including discovery, offering AI driven search, merchandising content, offering a headless CMS and engagement offering a leading CDP and marketing automation solution. Together these solutions combine the power of unified customer and product data with the speed and scale of AI optimization, enabling digital commerce experiences that convert on any channel and every journey. Learn more at bloomreach.com. That's bloomreach.com.
Michael LeBlanc
Now, you, you, you're a veteran of doing this, you and I have worked together you have looked at a lot of research. From this research, did anything surprise you? Did anything jump out and go, huh? I wasn't expecting to see that, anything come to mind.
Sucharita Kodali
Well, definitely the lower promotions where you know probably one of the biggest findings from that it that, I think that what we'll end up seeing is sales on what is available. And it doesn't mean that they're not going to be sales, because as we mentioned, you know, only a third of what they're going to reduce their sales. So, about half are going to probably keep the same sales and a small percent are going to actually increase the sale.
Sucharita Kodali
Volume. But the sale volume I think is going to be on very different merchandise and it may not be site wide. It may be on select items. So, I think that those are some of the big, you know, kind of differences that we see this year, or that we will see this year versus, versus last year. The other thing that I would say, was also it's probably not surprising, but the data highlighted it is just it's continued concerns around slow shipments. So, you know, it's not, it doesn't dominate the media quite as much and we don't have like (inaudible) stories. But I think that, you know, kind of retailers are already anticipating that I think a huge percent of retailers say that their shipping cutoff is going to be like two weeks before Christmas, you know, which suggests that they're expecting some pretty slow packages toward the.
Michael LeBlanc
Yeah.
Sucharita Kodali
Toward the end. So, so I think that, that will, will, we'll see a lot of I think that the standard shipping offer is like five days plus, according to a significant portion. I can just look it up here. It's like a huge percent of the 43% of respondents said that they're.
Michael LeBlanc
Right.
Sucharita Kodali
Wow.
Sucharita Kodali
You know, kind of shipping, you know, kind of it's going to take them five days, at least.
Michael LeBlanc
That's a big, that's a big, that's a big shift, right? I mean, the race has been speed to the doorstep, not paced to the doorstep in five days, right? That's a big change.
Sucharita Kodali
Yeah, and we saw that over and over in a number of the quotes from the respondents was, it's all about inventory this year, and if you.
Michael LeBlanc
Right.
Sucharita Kodali
Have it that is, you're way ahead of the game.
Michael LeBlanc
You're blessed. Yeah, you're blessed.
Sucharita Kodali
(inaudible) Even working out how long it's going to take people happy to just get the stuff by, you know, the end of December.
Scott Silverman
So, one of the questions we asked the retailers was, how aware do they think their customers are of the supply chain issues? And I suppose the fulfillment issues as well. And they seem to indicate that their customers are fairly aware, which makes sense when it seems it's been a big news item. It's been a punch line on SNL, for example. And their response is that they want to encourage customers to shop early, which I think they tried last year to limited success. I think it's something they're always trying to do. Do you think retailers can finally get customers to shop earlier? Even chronic procrastinators like me?
Sucharita Kodali
Well, I don't think it's happened yet. And to your point, I mean, you can, you can keep goading people, but you the way that you encourage people to shop earlier is you need those deep discounts. And we haven't seen those deep discounts yet. And we haven't seen those deep discounts because there's not the merchandise discount. So, so, so, no, I don't think that you know, that it's going to be that successful. But you know, how hard is it to send out an email and ask people to do that, you know, so a few people purchase earlier, you know, more power, more power to them. But for the most part, I think it'll you'll continue to see the cadence that we've seen in the past, like 10% of people start their holiday shopping and like October, you know, maybe half of people decide to shop sometime in November, and the rest are December or late December shoppers, and they get what they get. And they're, they're fine with whatever is available at that point in time.
I think that, that early shopping idea is most important. And I think that the people who already have their eye on a particular item are probably well aware of that. So, if it's a particular item there makes no you know, it's no sense to wait because you are going to, you know, you're not going to get what you want, probably at the price that you want and you're going to be stuck probably purchasing, you know, kind of the Air Force ones you want on GOAT or StockX or somewhere, you know, at a much more inflated price. But if you're open for substitutes, I think there's plenty of supply of substitutes. And, and I think that that's, that's, uh, you know, I think where most of the merchandise will end up, you know, kind of flowing to. And it actually is great because this is actually something that we saw through the pandemic is that if they're short supply, people just open their eyes to other merchants, they open their eyes to other product categories. And this just helps everybody. It helps, especially the long tail. And, and I think that we'll see more or that this holiday season.
Scott Silverman
Yeah, I think it's going to be interesting to see if how, how willing customers are to accept alternatives. And although there are some outlets to get what they want, like you said, in the marketplaces, but as far as keeping, you know, customers informed about the delivery and the fulfillment issues. We saw in the survey, that they're going to be emailing the customers, there'll be persistent messages on the website, there's some other things that they're going to be doing, like shipping information on the product page, like, you know, you're looking at a product, and it'll say, this product ships on X date. What else? You know, do you think these are the best tactics? And what else do you think they can do? I mean, or is it, there's only so much you can do to get people to focus and when, when they're so hardwired to want something and want it at a certain time.
Sucharita Kodali
Yeah, if you don't have the merchandise? Well, the survey said 69% of retailers are just going to do some kind of email communication, 44% said that they're going to have persistent messaging on the site or shipping information on product detail pages, 27% said that they're going to include it in their order information, FAQs, or the FAQs that include the order information and 9% said they're actually going to have pop ups on their site to inform people of this.
But I think that the bigger issue is that there was probably a pretty easy way to have solved this a long time ago. And that's invest in marketplaces and dropship. I mean, this is the reason that, you know, kind of companies that have been supporting this and offering these products have been pushing this is exactly in scenarios like this, where, you know, if you are short, you can leverage an ecosystem of sellers who can step in and share what they have. And when you don't have that, that is where you lose share to the large marketplaces. And, and I think that, you know, I mean, email communication is nice, FAQs you know, great, but what are you doing, you're just communicating that either we don't have the product, or it's going to show up late, you know, even better is to have the product or have a product, right?
Michael LeBlanc
In some way, shape or form in any way, shape or form, right?
Sucharita Kodali
Exactly and I, you know, so shame on everybody who sat around dawdling or, you know, twiddling their thumbs on this issue, because we've known this is an issue, like, you know, I mean, this is, this is something that happens in some way, all the time. And, you know, the playbook on, you know, kind of mastering marketplaces and drop ship, which are very similar, by the way, I mean, you know, the nuances are, are you know, kind of very deep in the, the, you know, kind of technicalities of merchant of record, and you know, who bears liability, etc., etc. But.
Michael LeBlanc
You say from the consumers perspective, it's a distinction without a difference. Really, I mean.
Sucharita Kodali
Yeah, it from the consumers perspective, it's imbecile endless aisle, and, you know, and, and, you know, I mean, and, and where is some of the clumsiness does come in, is if you launch a marketplace without vetting the sellers and without knowing, you know, the quality of the sellers that you're, you're working with, but over I mean, this has happened for, you know, this has been something that, you know, has existed for so long now that nobody should be inventing the wheel on this, like you can learn from the best players that have integrated it. You can.
Michael LeBlanc
Good tech, there's good tech out there if you want. Yeah, exactly.
Sucharita Kodali
Yeah, exactly. So, so I think that that's, that's, that's the, you know, the opportunity. I mean, I, recognized it like years ago. I, I would, you know, remember when the solar eclipse happened in the United States, it was, you know, it's a big thing and I looked for solar eclipse glasses, and I waited until the last minute and of course, it was sold out everywhere. They were sold out everywhere, and you know, I had to spend like a $100 on like Amazon with some seller to get them but, but that's like typical like, well, I expect that we'll probably see a lot of that over and over again, this holiday season. If you're looking for something in particular, and somebody waited until the last minute, if you really want it, you're just going to pay what it takes to get it. And, you know, it's not going to be a huge percent of people. But you know, I mean, at the end of the day, like, you know, with the marketplace is the one that makes the sale, and the seller that has that item is the one that makes the sale, not, you know, everybody else who, you know, insisted on only owning all of their inventory.
Scott Silverman
I mean, one of the interesting things I thought from the survey was the question around margins, their expectations around those, and I came into this thinking that margins would be higher, because it would be less promotional, there would be higher prices, they'd been passing along inflation, to customers and so on. But we didn't see that. And it's, I'm interested to hear your take on, on that. And they were also, you know, even despite reporting expectations, on lower margins, they're not necessarily being more promotional. I suppose they can't if they don't have the product, but yeah, what what's your take on that?
Sucharita Kodali
Yes, that was one of the most puzzling questions because what we saw is the majority of people all believe that sale, sales will do better, certainly, that compared to pre pandemic, and a huge percent also believes sales will be better than even last year, however, a huge percent, not quite 50, but a significant double-digit percents, I think it was, like almost 40%, who think that margins will be lower. Now we have inflation, and we have fewer promotions. So, margins shouldn't be lower, because those are things that drive your margins up, not down. So, it was a little bit of a puzzling finding from the study. So, my thinking is that maybe people are budgeting in disappointments and some of the make goods that they need to accommodate. Like, for instance, and then maybe they have to pay for expedited shipping to get things to people.
Michael LeBlanc
Yeah.
Sucharita Kodali
Or they're going to have to have more support in the call center during key dates, or they're going to have to give concessions to shoppers more than they have before. And that is going to decrease the margin levels. That's the only thing I can think of, because
Michael LeBlanc
I've, I've heard three, I've heard all that. I've heard a couple other things. One is for some of the larger merchants, their inventory, cost of capital has gone through the roof. In other words, they've got inventory sitting around for many months that they would not have. So, they're tying up capital, they've got third party warehouses. So, there's some cost in the getting ready for the season with the amount of inventory. You know, we hear the cost of the supply chain just skyrocketing. $5,000 containers become $25,000 containers. And then people costs are going up, right? We started a little bit of that. And it's a it's kind of a segue to my, my question is, is you know, the, the war for talent, both at the front lines and behind the scenes is going up, rates are going up, not down. And of course, retail still very much a people business. And, and it did you, you want to speak to that part. The people part that, that came out in the in the survey and thoughts are from retailers on that.
Sucharita Kodali
Yeah, yeah. No, you're right. As I'm thinking, you know, kind of as you're mentioning it, you're absolutely right. We do hear a lot about things like those, you know, everything is more expensive. And then a lot of retailers have decided to airfreight things. So, I guess that's, that's where some of those costs could be, could be happening to is, it' just the you know, the higher logistics costs. To your point of getting things from point A to point B. The you know, as far as labor is concerned, this has been something that as an industry, it's inevitable, right? It was I mean, we for years, we've been talking about a living wage, if the Europeans were, have already been there for, for you know, over a decade.
Michael LeBlanc
Yeah.
Sucharita Kodali
You know, you, you started to see it years ago in the dense urban areas, whether it was New York or Seattle, where you had these minimum $15 an hour, you know, minimum wage, you know, statutes, basically in municipalities, and that was something that was really, you know, likely to catch fire and, and grow to many more communities, many more states. You know, just just inevitably and, and really, and you know, and plus you had things like the Affordable Care Act that were there to support workers, but nonetheless did increase the, the cost of operation for some retailers and.
Michael LeBlanc
And, and hiring costs too, right? mean, you, you know, the pandemic, we can't forget there's a lot of people retired who were saying, listen, I'm, I, I may or may not feel safe working in the store, I'm gonna sit this one out. So, a lot of retailers are having to re staff. I mean, there's a lot of just, you know, sand in the gears of margin, I guess.
Sucharita Kodali
Yeah, yeah, no absolutely.
Michael LeBlanc
(inaudible) all these things that are that are coming together. Alright. So, it is December 26th, January 31st, February 5th, you're sitting down looking at the data what do you think you're going to see winners, losers, category, business models, you've already spoken? Well, those of the marketplace have a leg up any other thoughts from, from Forrester and the magic eight ball or crystal ball that you have at your disposal?
Sucharita Kodali
Well, Forrester's projections are that retail overall will probably be relatively flat in 2021, over 2020, and eCommerce, though, will grow in the low double digits. So, 2020 over 2019 was like 25% year over year growth for November and December. So, it'll probably be half of that in 2021, over 2020. So, it'll be a haircut, a pretty significant haircut over the growth rates, but it's still growth. And that's good.
Michael LeBlanc
Yeah.
Sucharita Kodali
Though. So, I think that, you know, anybody who's got inventory, should see numbers going up. I'll be, I'll be, I mean, unless you have a dismal inventory situation, you just have nothing to sell. And, you know, in your.
Michael LeBlanc
Imagine.
Sucharita Kodali
Yeah, right.
Michael LeBlanc
Imagine, right?
Sucharita Kodali
Terrible execution from a, from a shipping standpoint.
Michael LeBlanc
Yeah.
Sucharita Kodali
Like you, you know, you should do okay, because it's still, you know, there, there is still.
Michael LeBlanc
There is still demand out there, there's still demand.
Sucharita Kodali
There is still demand, savings, there are people you know.
Michael LeBlanc
All those things.
Sucharita Kodali
You know need to buy stuff, absolutely.
Michael LeBlanc
Alright, last question, then I'm going to pass it back to Scott to say, thank you for, for both doing the survey and joining us today. It's, you know, it's February 2022. You're a retailer, you're a marketer, you're sitting down trying to figure out what and how the playbook is different for 2022. Any thoughts around tips or advice about things retailers should be thinking of from a marketing tactics, customer relationship perspective?
Sucharita Kodali
In 2022, I think that, well, what I'll say is that, you know, in, in having done a lot of these surveys over the years, that tactics don't change that tremendously, like, you know, I mean, when we would do surveys, like in the early 2000s, and then like, 20 years later, we're, you know, kind of asking the same questions like, you know, it still came down to paid search and email. And, you know, you know, that Facebook, sort of what you just started growing a little bit, I guess, like some people.
Sucharita Kodali
Metaverse, maybe it's the metaverse for 2022, maybe that's new, maybe?
Sucharita Kodali
Yeah, exactly. Yes. You better be meta-versed or.
Michael LeBlanc
Shopping avatars, that's new.
Sucharita Kodali
Right. We're all going to be in the matrix and information in which you are not.
Michael LeBlanc
I think we already are, by the way, based on based on what just happened over the last 18 months. I think we already are, but anyway.
Sucharita Kodali
Yeah, that we will save that discussion for another time. But, but yeah, I mean, I think for the most part, a lot of the, the core tactics don't change, there will be more experimentation around the margin, whether it is you know, more video marketing, or whether it is more podcast marketing, or, you know, I mean, it's, it's whatever, you know, if there are new media formats that emerge, we'll see more of that, like the big media format now that people are talking a lot about our retail media networks, which is basically the.
Michael LeBlanc
Right.
Sucharita Kodali
Advertising on sites like Walmart and Target. And, you know, that could, that could be a game changer for some, some brands. You know, I'm not saying that it's going to you know transform digital marketing for the average Shopify seller, but it could be, you know, kind of a sizable shift in how the media mix is for maybe a PNG. That's, that's something that is, is worth, you know, watching and keeping an eye on.
Scott Silverman
So, first of all, thank you so much Sucharita always giving us a lot to think about. We really appreciate you being part of our community, being a part of this survey, taking some time to go through the results. I think that'll be really helpful information for everyone that's in the, in the midst of all of this craziness right now. So, we really appreciate that. Look forward to seeing how it all plays out and, and you know, staying in touch with you and seeing what you're talking about as the season goes on. So, thank you again. Have a great Thanksgiving, a great holiday season and look forward to touching base with you in the new year.
Sucharita Kodali
Yeah, absolutely. And thank you, thanks to all the retailers that responded and be sure to get a copy of the PowerPoint that has all the findings.
Michael LeBlanc
Thanks for tuning in to this episode of Conversations with CommerceNext. Please follow us on Apple, Spotify, Amazon Music or your favorite podcast platform, where we will be sharing career advice and marketing strategies from eCommerce and digital marketing leaders at retailers and direct to consumer brands, each and every episode.
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SUMMARY KEYWORDS
retailers, survey, people, retail, big, commerce, inventory, merchandise, promotions, sale, consumers, margins, supply chain, year, podcast, shipping, December, customers, marketplace, pandemic