Client Letters: Have No Fear, Q4 Is Here
Welcome to Q4. Isn’t this the time of year all of us retailers and merchants look forward to?
Whether it be student loan repayments, higher gas prices, a lack of housing formation keeping prices high, FTC filings or a Fed determined to break employment, one would think we will never sell another pack of underwear, shoe, plant or bottle for a newborn.
Is it that bad? No. Our view of how Q4 will play out is based on a number of observations:
Disposable income and savings are down. However, what is the one spending category that continually exceeds inflation each month on a year over year basis? Online stores.
Not all shopping searches are down. Amazon has seen two consecutive months of decline in search volume. There has been strength in Beauty, Health and Grocery but Toys, Clothing, Shoes and Jewelry all saw significant declines year over year.
The FTC filings only improve our ability to sell. Although the filings will likely lead to severe fines and not be resolved for quite some time, Amazon has already preemptively launched programs like Seller Fulfilled Prime, Brand Tailored Campaigns and a pullback of several private label programs.
Shrink and theft leading to brick & mortar malaise. Difficult to quantify but one could argue eCommerce is seeing a shift in spend.
So what can we do to perform our best for Q4? Focus on the basics:
Look our best. All listings should be informative, well reviewed and ready to shine with all variations active.
Be in-stock. We must have inventory if they come and it must be shipped to end customer in 2 days or less.
Spend wisely. Minimize your branded advertising spend. The customer is already looking for you. So if 1 and 2 above are set, the brand sale is a given.
Although we won’t see the coiled spring buying of pandemic yesteryear(s), I do believe Q4 will be positive year over year. Our brands, inventory, expertise and customers are captive to the stickiest and most convenient methods of shopping we have ever seen in retail. If we stick to the basics, we should see a positive Q4.
Until next time,
Ryan Craver
Disclosure: Client Letters are intended for Commerce Canal clients, investors and employees. Commerce Canal and its officers, directors and employees provide this content for informational purposes only.
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