Valentine's Day is approaching and you're either one of those people whose heart fills with sentiment, or you're one of those people who grumbles at even the mention of cupid and flowers and plan to spend the evening on the sofa, alone. Either way, this is the perfect holiday for retailers to reach a large number of consumers looking for the perfect gift for others and themselves.
Ready, set, shop
Christmas faded fast in retail stores and hearts went up starting Jan. 1. "Online Valentine's Day offerings roughly double over the first week of the new year and then grow steadily and rapidly throughout January," said Aron Hsiao, research director, Terapeak. And the push is not too soon, as consumers begin to shop in the same time frame. In fact, shopping activity grows more quickly than the offers. Hsiao says sell-through rates roughly triple at the start of January and remain steadily high throughout the month.
And whether or not weary retailers coming off of the Christmas rush are ready, consumers are discovering products and engaging with brands at a much earlier point in the buyer journey. Valentine's Day no longer creeps up for shoppers, as visual networks such as Pinterest, Tumblr and Instagram serve as constant reminders, according to Apu Gupta, CEO of Curalate.
While it's too early for concrete numbers, Terapeak, a leading aggregator of e-commerce data for eBay, says that based on data from key Valentine's Day sales categories on eBay, dollar volume is generally up several percentage points over the same time period last year.
"As this holiday season spend increased over 2013 and as people are broadening the scope of what they buy for Valentine's Day, we believe that this will be a strong year for the Valentine's Day selling season," said Lane Gerson, co-founder of Jack Erwin, a New York-based men's shoe startup. "Not to mention, as online traffic increases so do consumers shopping for unique, special gifts with niche brands that can only be found online."
But retailers can't forget that for a good portion of the country it is still winter. According to Breton Birkhofer, client success manager, Euclid Analytics, store traffic leading up to Valentine's Day will likely decline from last year, especially with all of the stormy weather in the Northeast. However, spending is still expected to increase from last year, due in large part from online and mobile purchases.
The winning retail formula
So how do retailers stay on-top of the competition? With the steady growth of mobile and e-commerce in the last few years, Hsiao said that sellers who make products available early and competitively on mobile-friendly platforms—and can nail unique yet traditional offerings—will have the best potential to sell this season.
"I also think that online shoppers' standards and expectations will continue to increase incrementally; while online shoppers five years ago might have shopped early and cautiously, assuming they might run into difficulties buying online, shoppers in 2015 are much more willing to do last-moment online shopping," said Hsiao. "Over the last several years, thanks in part to emphasis in these areas on both Amazon and eBay, shoppers have developed the expectation that they'll receive good products, quickly, and with good customer service."
Plus the demand will be more instantaneous. This year, many shoppers will be looking for products or services on mobile apps, from finding a date on Tinder or OKCupid, to restaurant reservations on OpenTable or flowers and an outfit to wear on the date, according to Maya Mikhailov, co-founder and executive VP of GPShopper.
Retailers need to remember that shoppers spend a lot of time staring at their mobile phones so Makhailov says they need to take advantage of this platform by offering click-to-call banners or geo-target push notifications reminding last minute shoppers of in-store specials.
The message retailers send to shoppers can also make or break their holiday sales, according to Adam Marchick, CEO of Kahuna. Since the holiday focuses on love, some shoppers are in a relationship, others are not, therefore, "blanket email campaigns are completely ineffective and can actually be more harmful than helpful," he said. "There are plenty of tools available to marketers to help them create intelligent campaigns and turn marketing into two-way communication, rather than blasting customers with spam. If companies are not focused on creating a conversation with consumers, they're firing blind and their results will be a reflection of that."
For some retailers, the first big holiday of the new year is an opportunity to grab new customers, especially those of the opposite sex. "For gender-focused retailers (Trumaker as a men's clothing company, for instance) it's an opportunity to speak to and acquire customers from the other gender. That said, retailers also have to be sensitive and inclusive to different lifestyles, so it's important to have messaging that reflects that," said Mark Lovas, CEO and founder of Trumaker.
New and growing channels
Consumers are always hunting for new channels on which to conduct shopping research, look for advice and purchase products. This year, Pinterest's Guided Search feature is a good example of a new technology that is making it easier to shop.
"It's a lot like a 'choose your own adventure' story, whereby one action leads to another, and so on," said Gupta. "A search for 'Valentine's Day,' for instance, triggers sub-categories to help users home in on what they want. Are you looking for decorations? Desserts? Gifts for her? For kids? If you're a parent, this allows you to cut through all the romantic stuff and surface Valentine's Day-themed projects for kids."
The smartest retailers will play into the newer technologies and social tools to grab shoppers' attention early, said Gupta.
"Writing detailed pin captions that speak to the holiday, the buyer and the value may seem obvious, but you'd be surprised at how bland most pin captions really are. Detailed descriptions don't just give products context. They also make it easier for Pinterest to categorize your pins, which ultimately makes it easier for consumers to search for, discover and take action on your content," he said. He also spoke to the power of Instagram, which can be a huge win for brands. And retailers that allow customers to click on their site from Instagram will really get the most out of their social medial platforms.
And mobile is playing an increasingly important role in Valentine's Day as it is notoriously a holiday of procrastinators: Last minute relationship status changes, looking for the perfect gift, etc., will leave shoppers scrambling and, in turn, looking for products or services on mobile.
"Mobile fills an immediate need for shoppers, and retailers with great apps should expect an increase in mobile purchases. Capitalizing on user intent to purchase, especially on this important day, is a great way for retailers to drive revenue and cultivate loyal customers," Marchick said.
However, Marchick reminds retailers that it's not about e-commerce versus physical stores. Rather, in order to succeed, the channels will need to work together. With a growing ominichannel mindset, retailers need to offer a seamless experience for all consumers. "Mobile, online and in-store shopping all have their strengths and weaknesses, but working together they can create experiences that cultivate loyal shoppers and even brand ambassadors," he added.
Allan Haims, a former top retail executive and CEO of in-mall mobile retail solution StepsAway, agrees that ignoring omnichannel touch points can be a big mistake for retailers this Valentine's Day. Retailers need to make sure that deals and flash sales are in front of consumers on mobile and in-store and offer a variety of deals for each. This ensures consumer engagement from all angles and multiple platforms for meeting their needs.
Standout Valentines of 2015
Men will spend more than double what women will spend this Valentine's Day, according to online retail marketplace Rakuten's Shopping Secrets survey. Men will spend an average of $104 compared to women's $45. And what are they looking for? While men went for kisses and hugs as their top gift choice, 38 percent, women were more materially oriented. Forty-five percent prefer chocolates, wine or food; 36 percent would like flowers or a soft toy, and 31 percent preferred jewelry.
While candy, flowers and jewelry are a mainstay, top sellers also include different kinds of Valentine's-themed products such as household decor, according to Hsiao. Any crafts or vintage-style decor in the signature red, pink and white shades or with a Valentine's theme will also do well.
Sellers may do a great business in jewelry, but there are also secondary themed products such as heart-themed flower vases or serving dishes, even jewelry storage. And the more modern shopper may be on the hunt for mobile phone cases or tablet holders. Also, the men's gift area tends to be a less competitive market space, yet it's amongst the top searches on eBay right now.
Haims warns that retailers cannot resort to only promoting traditional gifts. "While jewelry, chocolate and flowers remain timeless gift options, consumers are also open to more creative ideas such as presents for children and pets. There is also an untapped opportunity
According to Mikhailov, the differentiator this selling season will be experience.
"The millennial consumer wants to buy experiences even more than products. If retailers hope to sell more product, they need to design an experience around it–perhaps a special in-store event, or a tie-in with a concert or restaurant. This experiential shopping is also expressed in storytelling. Shrewd retailers are presenting smaller assortments of products but each with a specific story so the consumer can feel a part of that experience," she said.
Brooke Richman, CEO of coop & spree, said that retailers can differentiate themselves this holiday by really knowing their customers and carrying special items accordingly. "For example, we sold Eberjey pajamas extremely well—we sold over 50 pairs in just a few days," said Richman. "Noticing how responsive our customer was to these pajamas during the holiday season, we purposely purchased Eberjey Valentine's Day-themed pajama sets for the store."
"It's not about the fancy sweater, it's that you will enjoy spending time more with your man because his sweater is so soft. We also pitch the appointment as a shopping experience that is something you do together," said Lovas. "It's about going through life together, not accumulating more things together."