Five Essential Strategies for Seasonal Merchandising
By Lizzy Bowring
In today’s challenging economic environment, marked by potential recession and rising living costs, retailers must navigate a complex landscape to earn consumer spending loyalty, especially in the luxury segment. (And with the latest report from The State of Fashion 2024, the future looks unsteady). This imperative becomes even more pronounced during critical sales periods. Effective merchandising, akin to providing outstanding value, remains eternally relevant in the ever-evolving and digital-dominated world of apparel, fashion, and luxury. Merchandising’s breadth, encompassing a range of skills crucial for retail excellence, includes in-depth knowledge of products, understanding consumer behaviors, optimizing channels and timing, and strategic decisions about pricing, promotions, and stock replenishment. These elements are vital in generating value and securing a competitive edge. But all this requires a seamless integration of departments; marketing and merchandising are the cornerstone partners in this endeavor. While marketing draws in customers, strategic merchandising translates this interest into sales – particularly vital for luxury brands, where the challenge lies in balancing attractive deals with preserving an exclusive brand image. Locking into seasonal storytelling is an imperative plan for success. The Impression explores five fundamental merchandising strategies, highlighting their synergy with marketing initiatives to craft an engaging retail experience.
In the pandemic’s wake, reinforcing top-tier merchandising capabilities is synonymous with business success. With the imminent approach of 2024, brands must present thoughtful strategies to further their reach and consider unique opportunities to leverage these moments effectively. Seasonal merchandising is a transformative force in retail, a dynamic lever that, when expertly managed, can substantially increase sales and enrich the customer experience. As seasons change, so do consumer behaviors, desires, and expectations. Grasping these shifts is essential for retailers aiming to stay relevant and competitive.
Significant merchandising adjustments give decision-makers a prime chance to reassess and enhance their seasonal strategies. They offer a roadmap to navigate the current economic challenges and position businesses for future growth, resonating with consumers and driving sales throughout the year.
Top tier strategies.
–Less is more – Embracing Leaner Business Models: The importance of efficient operations during economic uncertainty.
–Leveraging Data and Insights: The necessity of integrated digital data solutions in driving performance for innovative marketing and customer engagement
–Creativity: Newness and Storytelling: The need to offer fresh products with compelling narratives with unique storytelling and innovative marketing campaigns
–Integrated Seasonal Synergy: Blending strategic collaborations, seasonal merchandising, and consumer insights to enhance brand appeal and drive sales during key seasons and holidays.
–Diversifying Channel Mix: The evolution of channel dynamics and the importance of a diverse omnichannel strategy provide consistent experiences across physical and digital platforms
Less is more – Embracing Leaner Business Models: The Importance of Efficient Operations During Economic Uncertainty.
In 2024, the fashion industry faces uncertainty with subdued economic growth, persistent inflation, and weak consumer confidence. McKinsey forecasts 2 to 4 percent global industry growth in 2024, with luxury segment growth expected to be between 3 and 5 percent, a slowdown from 5 to 7 percent in 2023. With over 50 percent of industry executives intending to raise prices, there’s a clear shift towards maximizing value over volume.
Consumer spending is anticipated to lean toward trusted categories and brands, especially in hard luxury goods like jewelry, watches, and leather, reflecting potential investment value. In this context, luxury brands should create value through quality, exclusivity, and strategic pricing, ensuring resilience in a challenging economic landscape.
Fashion Businesses should prioritize contingency planning and cost management to navigate these challenges. Integrating the following into the broader context is paramount.
-Streamlining product lines to focus on high-value items.
-Optimizing inventory through lean practices.
-Selectively raising prices on core products.
-Targeting marketing efforts towards loyal, high-value customers.
Hermès perfectly illustrates how to consistently maintain strong performance by focusing on a limited range of high-value items. Strategic pricing, limited production, and exclusive product releases have helped maintain a strong brand image and profitability. Hermès’ approach to managing inventory, prioritizing timeless design over transient trends, and sustaining high customer demand for its products makes it a notable example. In 2023, Hermès’ financial success vividly illustrated this approach. With consolidated revenues climbing to EUR 6.7 billion, a notable 25% increase at constant exchange rates from the previous year, net income soaring 36% to EUR 2.2 billion, and recurring operating income reached an impressive USD 2.9 billion, comprising 44% of total sales. The brand’s dedication to quality over quantity is evident in its meticulous production process, where skilled artisans craft each item, ensuring exclusivity and desirability. Strategic product releases, like limited editions and exclusive collections, and a deliberate distribution strategy further enhance this exclusivity. Hermès’ pricing strategy underscores its luxury positioning, balancing tradition with innovation to keep products timeless and relevant. Axel Dumas, Executive Chairman, attributes this success to investing in production, network expansion, and workforce development, emphasizing scarcity and quality over mass production.
Leveraging Data and Insights: Emphasizing the necessity of integrated digital data solutions in driving performance for innovative marketing and customer engagement
Data-driven omnichannel emerges as a vital blueprint for success and hinges on two fundamental elements: meticulous data analysis and a seamless omnichannel retail experience. There are three pillars within this strategy, and all are inextricably linked. The first is leveraging data analytics tools to understand consumer behaviors, preferences, and buying patterns, and by doing so, brands can effectively analyze this data to anticipate market trends and consumer needs, enabling them to curate an omnichannel experience that resonates with their target audience. McKinsey Global Institute highlights that data-driven organizations are 23 times more likely to acquire customers, six times as likely to retain them, and 19 times more likely to be profitable. Data-driven decision-making can significantly enhance product selection accuracy, often leading to a noticeable increase in sales and customer retention.
The second pillar of this strategy is the omnichannel retail experience. With the retail landscape spanning from brick-and-mortar stores to online platforms, brands must ensure their products are accessible across all customer touchpoints. This consistency across channels is about delivering a cohesive brand experience that fosters customer satisfaction and loyalty. An effective omnichannel strategy can result in higher customer engagement rates and increased sales, as it aligns with the modern consumer’s shopping preferences. Effective inventory management, guided by data insights, is another critical aspect. BARC research indicates that businesses using big data see an 8% increase in profit and a 10% reduction in costs. IBM reports that 62% of retailers gain a competitive advantage through information and analytics. Insight-driven businesses grow at an average of 30% annually, taking significant market share from less-informed competitors.
By maintaining the correct stock levels based on demand predictions, brands can avoid overstocking or stockouts, optimize their supply chain efficiency, and reduce operational costs.
Tory Burch exemplifies this strategy with remarkable effectiveness. Adopting an omnichannel retailing approach, the brand ensures consistent messaging and product availability across physical stores, their website, mobile app, and social media platforms. Their success is evident in their global presence and the seamless integration of their digital and physical retail experiences.
By integrating data analytics, a comprehensive omnichannel approach, and efficient inventory management, this strategy provides a robust framework for seasonal programs. It aligns product offerings with consumer demand, ensuring these products are accessible across all shopping channels; Tory Burch’s implementation of this strategy is a compelling case study for other brands aiming to navigate the complexities of the modern retail environment successfully.
Creativity: Newness and Storytelling: This exemplifies the need for brands to offer fresh products with compelling, unique storytelling, innovative marketing campaigns
Creativity is the linchpin for successful merchandising; providing the ability to offer consumers new and attractive experiences hinges on novelty and the power of a compelling narrative. The swift changes in consumer trends, fueled by digital platforms and social media, have shortened product life cycles, putting a premium on newness; this demands brands to be agile, frequently introducing fresh products to maintain consumer interest. But more than rapidly launching new products is required. Storytelling is vital – creating an engaging narrative transforms a product into a symbol of the brand’s values and ethos that resonates with consumers on a deeper level. In luxury fashion, storytelling and creativity reinforce brand identity. Each collection or product release offers an opportunity to delve deeper into the brand’s narrative, highlighting its history, craftsmanship, and unique vision. Storytelling invites loyalty by creating a rich, multi-layered brand experience. It is an essential form of artistry in a brand’s story.
To effectively implement this strategy, brands need close alignment among their product development, marketing, and sales channels, ensuring a cohesive approach to how products are introduced, marketed, and sold, keeping the brand relevant and desirable. Presenting a compelling narrative around a hero product – items that encapsulate a brand’s essence and identity – is pivotal in resonating with consumers who seek brands with clear narratives and a positive societal footprint. Luxury brands like Gucci and Dior exemplify this with their iconic products, which not only define their brand identity but also forge a deep connection with their audience. This approach meets the consumer’s craving for newness, and experiential involvement helps brands navigate the fluctuating demands driven by digital engagement and influencer marketing.
Although Jacquemus may stand out as a master of aligning branding with marketing, it is noteworthy how he seamlessly blends in-season newness with a compelling narrative, ensuring each product release has a unique identity. His storytelling, fashion events, and use of social media to connect with his audience are methods of building a solid brand appeal. Whether it’s the inspiration behind the journey of a collection or his trademark colours, Jacquemus makes his audience feel part of something exclusive.
Tapping into the current zeitgeist is critical for storytelling. Consumers must know if their go-to brands invest in key global issues, such as addressing climate change, sustainability, community building etc. Consumers increasingly seek outdoor activities, so consider outdoor and technical clothing as an inspirational merchandising objective. (“gorpcore”). Additionally, being responsive to the shift towards healthier lifestyles and travel is another imperative.
Added to this are the imminent seasonal changes, and with creative marketing and merchandising teams, these should be a no-brainer. The following are expected initiatives.
-Spring into Action: Spring’s arrival heralds a time of renewal and fresh starts. Explore how to infuse retail spaces with spring-themed visuals and products, tapping into the rejuvenating spirit of the season.
-Summer Sizzle: Optimize for Outdoors and Excitement as summer comes, so does the promise of sun-soaked days and outdoor adventures. Examine strategies for aligning product displays with summer activities and how in-store events and promotions can capitalize on the season’s vibrant lifestyle.
-Fall Forward: Cozy Up to Changing Tastes with Autumnal merchandising to herald a change of direction. Adjust in-store aesthetics to match fall’s warm, inviting tones and build evocative strategies for the back-to-school and pre-holiday rush.
-Winter Wonderland: Winter’s festive cheer is a golden opportunity for retailers to transform retail spaces to celebrate the season and strategy for holiday merchandising. For luxury players, navigating this peak sales period is a balancing act. Compared to mass-market counterparts, luxury brands, and retailers must be exceptionally careful to offer only a few discounts that dilute their positioning. They also don’t want to encourage shoppers to wait out the weeks before, saving their budgets for Black Friday bargains.
-Consistent Core: The Non-Seasonal Foundation maintains a selection of non-seasonal products critical to steady sales. Balancing seasonal items with core merchandise ensures a year-round diversified and attractive product range.
Prioritizing Sustainability: Changing consumer attitudes and regulations makes sustainability a top agenda.
The Fashion industry can no longer sweep the issue of sustainability under the carpet. Buffered with the recent COP28 findings, it is essential to make this merchandising strategy paramount. The industry, responsible for about 4% of global emissions, heavily relies on materials like oil-based polyester and cotton, which have substantial ecological footprints exacerbated further by over-production. Brands and retail need to understand that consumer attitudes are evolving, with approximately 75% of millennials willing to change their buying habits to lessen environmental impact; this shift is reinforced by tightening regulations, such as the EU’s Green Deal, pushing the industry towards more sustainable and circular business models.
Prada is a prominent example in this evolving landscape, demonstrating proactive sustainability efforts and successfully navigating this shift by adopting significant sustainable practices, such as the Prada Re-Nylon collection, which replaces virgin nylon with regenerated nylon and a comprehensive fur-free policy. Prada introduced the first sustainable fine jewelry collection using 100% certified recycled gold in 2022. Additionally, Prada has structured its internal Prada Group Academy to focus on sustainability alongside technical and managerial skills. This academy offers courses in manufacturing know-how, preserving knowledge for young artisans, and enhancing relational skills among employees. The training program dedicated to sustainability signifies Prada’s strategic integration of sustainable practices at all business levels. This approach aligns with the industry trend of incorporating sustainability into merchandising/marketing strategies, ensuring compliance with evolving consumer preferences and regulatory demands – if only brands could recognize the positive impact of sustainable practices on brand equity and performance.
Merchandisers are crucial in promoting sustainability, reducing waste, using sustainable materials, designing for circularity, and ensuring a responsive supply chain while involving cross-functional collaboration and earlier alignment on business needs to prevent overdevelopment and optimize resource use.
“The State of Fashion 2024” report further highlights the industry’s growing focus on sustainability. Amidst economic and geopolitical challenges, sustainability has emerged as both a priority and a complex challenge. The report underscores the need for brands to balance environmental responsibilities with commercial objectives, a strategy that Prada is actively demonstrating. This balance is becoming a critical aspect of successful merchandising strategies as brands like Prada lead the way in integrating sustainability into their business models and consumer engagement strategies. The fashion industry leaders in 2024 will need to balance sustainability initiatives with risk management and commercial objectives. This balancing act will be crucial as the industry navigates environmental, social, and governance issues, increasingly influencing strategic decisions.
Integrated Seasonal Synergy: Blending strategic collaborations, seasonal merchandising, and consumer insights to enhance brand appeal and drive sales during key seasons and holidays.
Success hinges on a brand’s ability to engage and captivate its audience. A compelling strategy involves a harmonious blend of considered collaborations, targeted seasonal merchandising, and a nuanced understanding of consumer preferences. Collaborations, especially with entities that align or contrast interestingly with the brand’s image, inject freshness and relevance. This approach, when executed well, not only elevates brand perception but also drives consumer purchasing behavior. On the other hand, seasonal merchandising taps into consumers’ emotional and cultural zeitgeist, making the brand’s offerings feel timely and desirable. However, the linchpin of this strategy is a deep understanding of consumer preferences. Brands must know what customers want and anticipate emerging trends and desires – consumers are likelier to engage with and purchase from brands that align with their values and the cultural moments they care about. By tapping into the cultural and emotional essence of various seasons and significant holidays and developing products and marketing campaigns that resonate, brands can create a timely and relevant connection with their audience.
A deep understanding of consumer preferences is at the core. Brands must actively gather customer feedback, monitor social media trends, and conduct thorough market research. This information is crucial for tailoring collaborations and seasonal offerings to meet consumers’ evolving desires and expectations.
Take, for instance, Dior’s partnership with Saks with ‘Carousel of Dreams’, a light and dance show that attracted not just a plethora of A-Lists stars but encouraged foot traffic directed toward specific merchandise or its seasonal campaigns like the Christmas ad featuring Anya Taylor-Joy. The campaign’s success was evident in its ability to tap into the holiday spirit – a time when emotions and nostalgia heavily influence purchasing decisions. By aligning its brand heritage with a modern fairytale-like campaign, Dior effectively captured the season’s essence, increasing consumer engagement and sales during a crucial retail period.
Crafting a narrative and experience that transcends the product itself, making the brand an integral part of the consumer’s lifestyle and cultural conversation, enhances brand visibility. It also significantly influences consumer purchasing decisions, aligning with their desires, values, and the cultural moments they celebrate. Merchandising forms a powerful strategy when combined with strategic collaborations and a deep understanding of consumer preferences. For brands aiming to maximize their impact and sales, focusing on these seasonal moments, understanding their unique dynamics, and crafting collaborations that resonate with the spirit of these times is essential.
The Ten Key Takeaways
Companies that can embed these strategic priorities to fit their unique circumstances will likely be the most successful — leveraging these approaches to embed a more agile merchandising capability and creating flexibility to manage through the downturn will be the most effective. Adapting to the current retail environment where seasonal promotions require encompassing a multi-lane go-to-market calendar, an adjusted sourcing model, a focus on net margin, scaling up test and repeat processes, managing open-to-buy, reducing range complexity, defining a clear clearance strategy, creating organizational clarity, emphasizing sustainability, and most importantly, building an agile merchandising capability via storytelling and collaborations is no easy feat.
Curating the Consumer Experience is vital. The product assortment is the opening note to invite the customer into a brand’s experience. Effective pricing strategies form the core of a brand’s value proposition, and selecting products that align with the season and stay true to the brand’s identity and promise is paramount.
Know your customer and consumer preferences – consumer spending is likely to lean towards trusted brands and categories, with a preference for hard luxury goods like jewelry, watches, and leather, seen as valuable investments. Emotional connections and authenticity indicate a shift in marketing and brand engagement strategies. Understanding evolving consumer preferences is key to navigating the complexities of the current economic landscape.
Visual Display: Retail spaces are the stage where the brand story unfolds visually. The importance of window displays, layout, and the overall environmental design in creating a narrative that resonates with shoppers is one of the most essential strategies linked to the ultimate value.
The Strategy of Value: Effective pricing strategies form the core of a brand’s value proposition; thoughtful pricing can attract sales and contribute to the retailer’s bottom line. Recognize that seasonality only applies uniformly to some products at some locations. Analyze how each SKU behaves during different seasons.
Promotional Cadence: Promotions drive the retail cycle. Synchronizing promotions with seasonal themes can amplify sales and enhance brand visibility.
Optimizing the Path to Purchase: Optimizing the shopping experience across all channels, ensuring a seamless and integrated customer journey from online browsing to in-store
Account for More Variables in Your Seasonal Merchandise Planning: Retailers often lock in their seasonal plans well in advance, but the dynamic nature of factors like pricing, consumer preferences, competitors, events, promotions, vendors, and logistics can impact merchandising strategies. To make better decisions, consider using a retail-specific demand forecast that automatically factors in these variables. This approach can help cut inventory costs, increase sales, reduce markdowns, improve vendor relationships, and optimize inventory.
Optimize Inventory Levels for Successful Promotions: Promotions drive seasonal traffic and sales. However, launching promotions without considering other business units and plans can lead to poor performance. Seasonal merchandise life cycles are becoming even shorter, creating planning challenges. Align promotions with inventory levels and ensure sufficient stock to meet demand during peak season.
Leverage Influencer Collaborations: Collaborate with influencers or brand ambassadors to promote seasonal products. Their endorsement can create buzz and drive interest among your target audience.
Set standards and lock into the current zeitgeist: With all that consumers face now and in the future, remember that your offering must stand by the consumers’ expected values. Transparency is essential.
Success in merchandising isn’t just about products; it’s about purpose, innovation, perseverance, and wholehearted team effort. “The products or services you sell are not why you start a business. They’re a means to a larger goal. When your team, suppliers, collaborators, and customers buy into that goal, too, selling becomes the easy part. “Tony Hsieh. CEO of Zappos and author of “Delivering Happiness: A Path to Profits, Passion, and Purpose.