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Tis the Season…To Woo Holiday Shoppers With Personalization & Speedy Checkouts

Wreaths are hanging, eggnog is being warmed up, holiday gift “wish lists” have been written and rewritten by excited kids everywhere. And it’s all in preparation for the biggest shopping season of the year. With desktop web sales projected to reach between $457.8 and $48.6 billion during November and December, personalization and optimized checkout processes are two surefire ways retailers can stay competitive.

According to our recent holiday shopping research, 87 percent of American shoppers will click on a holiday promotion inside a retailer’s e-newsletter or blog if it is targeted and relevant to their needs. Another very telling finding is that 67 percent of respondents most value free shipping options in the online checkout process. In fact, free shipping took the number one spot in customers’ checkout preferences over product recommendations, estimated/guaranteed delivery date, variety of payment options and ability to save purchasing preferences. For more holiday shopping and ecommerce insights, check out our Holiday Shopping Infographic.

With these findings now in-hand, I decided to take a more in-depth look at one big box retailer – TJ Maxx – to identify areas where the brand is missing the mark on delivering a personalized, relevant experience. MarMaxx, as the TJX management team refers to TJ Maxx and Marshall’s, has been slower than most to ramp up its ecommerce efforts for a few reasons. First, from their most recent conference call, it’s clear that there’s still ample growth opportunity in the company’s continued expansion of store count here in the US, as well as in Europe and Canada.

Next, its business model is predicated on offering its customers “extreme values” and enticing them to continue to visit stores, and soon the web, where consumers will be looking for “designer brands at bargain prices.” This business model has become so deeply embedded into the brand’s identity across all touch points that it has even coined the term “Maxxinista” to identify the persona of TJ Maxx shoppers. It’s the excitement of hunting for fashion “gems” at killer prices that have been crucial to building and growing customer loyalty and engagement. They do this by buying the “leftover” inventory from other retailers, wholesalers, manufacturers and other distributors, and therefore do not enjoy the consistency of inventory that some of their peers do. Because of the inconsistency of inventory available, it can be difficult to adequately merchandise their website because, in one instance, they could have a very limited stock of a designer blouse and, in another instance, they could have up to 30 size options for one specific type of winter coat. Not wanting to neglect the in-store experience, this makes merchandising the site (i.e. choosing the styles to put up on the web and process of taking down styles that have sold out) a significant challenge.

That being said, the possibility of providing customers with 24/7 access to the brand is too large of an opportunity to pass up. To prepare for the web, where each customer is competing for great bargains against every other customer in the country, TJX has beefed up its merchandising and sourcing organization. In their most recent earnings call, they boasted having a team of 900 associates within their buying organization and touted themselves as a “global sourcing machine” consisting of 16,000 vendors.

In the earnings call, TJX management also described early results for the digital channel as “terrific,” and no doubt the web, and eventually mobile, will continue to serve as a another terrific platform for offering great values. Their management has advised that they are planning to take a “grow smart” approach with the web, and I believe that personalization will be the key component to smart, long-term growth of this channel, as it will help ensure that the web is accretive to their most valuable customers’ engagement with the brand, and does not inadvertently interfere with or alienate their loyal customers who are accustomed to visiting their nearest TJ Maxx or Marshalls stores and always finding great deals on styles they love.

The TJX management team is intent on offering ‘Good,’ ‘Better,’ and ‘Best’ products through the web across a range of price points, but the risk is that with a limited supply (one to just a few pieces) of some of their most compelling styles via the web, the whole country will be competing for the best deals, ultimately risking turning MarMaxx’s web presence into something of a flash site. With true personalization that tailors each visitor’s web and mobile experience to their specific set of preferences, based on attributes that are gathered over time, MarMaxx can save some of its great treasures for its most valuable customers, and present the great finds that reflect a particular customer’s known brand and aesthetic preferences for those customers.

Furthermore, personalization on the web could potentially benefit margins. If the company chooses to enable robust inventory tracking and ship-from-store capabilities, a great piece that isn’t selling at a remote store in Texas, based on the local preferences of the customers who shop that particular store, the company can put that style online and present it to visitors whose known preferences match the characteristics of that piece, be it the color, cut, brand, lifestyle it represents, or some other characteristic, to sell it at a higher margin to a more relevant audience, then ship it from that store in Texas to wherever the ultimate buyer of the piece might live. The traditional alternative would be to take deep markdowns on that piece until it sells or dispose of it altogether, either of which would have an eroding effect on margin.

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