The inflation rate is rapidly changing, and it is already affecting consumers' spending habits. 86% of people expect rising consumer prices will change how and what they buy, according to research from Ipsos.
Anyone in the wholesale business knows how disruptive this is. As customers dial back spending habits, your bottom line is negatively impacted by lower average order values (AOV) and reduced sales. Fortunately, having the right platform in place should also give you four options for combatting these challenges.
1. Price Optimization
Price optimization is the science of matching the right amount to your customers’ preferences. Why does it matter? Roughly 60% of online shoppers rate pricing as their priority.
Before the digital age, one strategy to optimize pricing was to delegate decisions on discounts to salespeople. If a salesperson felt they were close to making the sale, they might have the autonomy to cut the price by 10%.
But this autonomy was essentially guesswork. Modern price optimization uses options like flexible pricing, online ordering pricing previews, and custom linesheets to give budget-conscious customers an incentive to spring for discounts by buying more. Flexible pricing also responds to shifting market demands to reduce customer churn, even during periods of high inflation.
2. Assortment Planning and Personalization Via Data
According to research from NielsenIQ, “changes due to rising prices have exposed limitations in traditional methods for allocation, assortment, and promotion planning.” The key to overcoming this is learning all about customer behavior and changing your offerings based on personalization.
For example, when we worked with Menswear brand Mizzen + Main, they needed faster ways to personalize retail catalogs for buyers than static presentation tools were offering. They implemented our Whiteboard tool and Mizzen + Main found it much easier to build personalized customer assets like line sheets. Customers could then view personalized presentations that spoke more directly to their needs, helping to justify each purchase.
3. Promotion Management
During inflation, buyers keep a sharp eye out for promotions. But since offering a discount is nothing new, you should think of alternative ways to attract attention without damaging your own bottom line.
One common tactic is offering cross-promotions of credit within your own store. For example, if you offer one item of clothing but want to sell the complete set, offer a discount on the entire set when a customer shops for a single item.
Creative promotion management like this requires a flexible digital platform, with pricing optimization baked in. But while a platform can facilitate your promotions, it will be up to you to identify the key opportunities for incentivizing customers. Do this with cross-selling and up-selling promotions that cater to your customers’ needs.
4. Collaboration With Retailers
Brand collaborations are a great way to build an omnichannel relationship with customers. Tighter relationships between brands and suppliers can help stave off price increases associated with inflation. This creates a one-of-a-kind competitive advantage when other brands are struggling to keep up with higher prices.
The way to prepare for inflation is through a shared data platform like NuORDER. The more seamless your ordering platform is, the better you’ll be able to adapt to shifts in macroeconomic trends like inflation. Request a demo today to see how you can leverage these advantages to create one-of-a-kind offers to customers who are tightening their budgets.