What trends can we expect from Q4 2022?


The holiday season is a crucial opportunity for brands…


You can’t afford to get your approach wrong this year…


But what are the most up-to-date strategies to win sales and stand out in the market?


In this episode, I’m joined by Elaine Kwon for a deep dive into retail trends and expectations for Q4 2022.


Listen to learn:
  • How to create sales without devaluing your brand
  • The post-pandemic retail landscape
  • E-commerce growth strategies for 2023
  • Supply chain updates for Q4
  • What makes fashion/beauty brands successful online
  • And more

Mentioned in this episode:


Voiceover: This is Performance Delivered, Insider Secrets for Digital Marketing Success with Steffen Horst and Dave Antil.


Steffen Horst: Welcome to the Performance Delivered Insider Secrets for Digital Marketing Success podcast, where we talk with marketing and agency executives and learn how they build successful businesses and their personal brand. I’m your host Steffen Horst. The topic for today’s episode is retail trends and expectations for q4 retail and ecommerce. Here to speak with me is Elaine Kwon, who is the founding and managing partner at Kwontified, an ecommerce management and research firm specializing in fashion and beauty growth online. Elaine is a multilingual ecommerce sales leader with demonstrated success in identifying, strategizing and resolving hierarchies of product with powerful solutions within the constantly evolving and competitive landscape. Elaine, welcome to the show.


Elaine Kwon: Thanks so much for having me, Steffen.


Steffen: Now, Elaine, before we talk about the retail trends and expectations, tell our listeners a little bit more about yourself. How did you get started in your career, and what led you to founding Kwontified?


Elaine: Yeah, absolutely. So taking a step back, I’d say that it feels like fate. But really, I’ve spent different parts of my career in different angles of the ecommerce world, starting with the warehouses, actually at a company called McMaster-Carr, where I worked in the receiving department, and really understood what it took operationally to provide same day shipping on online orders way before Amazon did. And so that really helped me understand, okay, the amount of capacity, people, machines it took to run, you know, at the time, one of the most cutting edge online businesses. 


Switching gears, I also worked at Amazon, where I started getting into the business side of building an ecommerce behemoth, you know, what it took to build supply across categories. And then on the demand side, what it took to build the best customer experience, and understanding that consumers have a very particular way of shopping. And if you understood what they were looking for, and what their behavioral trends meant, you could make the difference between positioning a product through certain campaigns that could make 8000 times what its competitor product could make, if positioned differently. 


And I think, in my experience, seeing all these things happen, working specifically in the fashion, beauty soft line space, I started hearing a very similar complaint over and over again. And this complaint, this concern really was coming from brands and manufacturers who would say, you know, hey, it’s, it’s great that Amazon is growing 30% year over year. It’s great that you know, this channel is growing so quickly, but we the brand, or we the manufacturer, we did the math, and we’re actually unprofitable selling to you. Or, you know, we actually are not growing despite all this growth that this channel is seeing. 


And, and that really bothered me, because it pointed towards the signs of okay, this situation, this gap may not be sustainable for the future of ecommerce. And it wasn’t just a one off problem. We started seeing the same concern, very similar complaint across, you know, every category that I could get my hands on. And so this started for me inspiring me to think of how do we try to help and assist in resolving this issue? What will it take? And that’s really where the idea for Kwontified was born.


Steffen: Now, today’s topic is retail trends and expectations. What are the trends in, for q4 in 2022? What do you see?


Elaine: Yeah, I would say one of the biggest trends that we’re seeing right now is that retailers are trying to extend and lengthen the holiday shopping season. Now as we all know, the holiday shopping season is known historically to be the peak for almost everybody, but in recent years, especially between the height of COVID and how quarantine changed consumer shopping behavior, and then the entry of Gen Z as a larger demographic of consumers within the target demographic, I’d say that the consumer behavior has become a lot more malleable, and as a result, retailers see an opportunity to expand and lengthen this holiday season.


Steffen: Now, how do we go about that? I mean, you know, from my own experience with ecommerce clients, you usually see a drastic drop off probably a week prior to the holidays, right? That’s when usually ecommerce sales drop because it’s hard for sellers to basically fulfill orders close to, you know, the holidays, you know. And then after the holidays, it’s like, oh, gosh, we did all the shopping now we need to break from that and things start to pick up a little bit in January. But depending on you know, what your product is and what you’re selling, it might still be slow moving. How do ecommerce sellers extend that period?


Elaine: Yeah. And that’s a great question, I think I should clarify by saying by extending or lengthening the season, what we’re saying is, they are starting the season much earlier than what we’re used to. And they’re doing it even now, actually. So we’re talking right now in October, mid October. And one thing that, you know, as a consumer, you may have seen is that you may have been bombarded with emails, social media notification, targeted ads, just messaging, lots of deals. Deals, deals, deals. And I think, you know, one underlying set of messages that has come out very clearly is this idea of self gifting. 


And so that’s actually that started prominently last year by certain ecom retailers who wanted to figure out and wanted to test ways to start the holiday shopping season early. Now, of course, you know, we knew that consumers were not necessarily going to start buying gifts for others for let’s say, you know, the end of December holidays, that early in October. But what if we message it towards a self gifting theme? You know, like, before you start buying gifts for others, buy something for yourself. You know, is there something that you wanted, perhaps, that you’ve had your eye on, but just haven’t bought this year. 


And so there’s been a huge, I say, adoption for October, this q4 of lots of deal messaging with this underlying idea that consumers will first think of perhaps getting themselves something or getting something for their home or their family that perhaps they needed for a while, but just haven’t gotten around to purchasing. And really using this period to start kicking that off. I’d say, you know, combined with the fact that, you know, just economically, interest rates, has changed very recently. 


And so there’s even this idea of some media outlets that are talking about in encouraging consumers to buy now, because, you know, your money will be worth a little bit, you know, a little bit more now, versus perhaps waiting until later. And so I think, coupled with that, there’s a couple of different factors that have all played into this. But there are several signs, that has been several tactics that have been used to try to start that whole season much earlier than it was historically.


Steffen: So what we’re basically talking about is just create another reason to create a sales event. I mean, we have already Black Friday, we have Cyber Monday, we have, we have kind of the push towards, you know people needing to buy, or wanting to buy, however you want to look at it, presents for family, friends, etc. At the end of the day, it’s just creating another reason for sales.


Elaine: Yes, that is that is very true. And I think you’re bringing up a really interesting point which hits on the impact it’s having on the consumer, because, you know, these retailers are putting out and testing these different types of sales and events hoping that the consumer will respond, that the consumer will take. And just, you know, like, it’s very much it’s very much a conversation. So these retailers are putting these events out. And it is having an impact on how consumers view and how they shop and what their behaviors are now even compared to let’s say, two years ago.


Steffen: Now aren’t retailers devaluing themselves and their products by constantly offering sales? I mean, look, there are brands out there on purpose, they don’t offer sales, right? Because they’re premium, luxury, etc. They just don’t want to be perceived as this brand, that constantly sells something. Where I live, there’s a there’s a furniture store a couple of miles down on the freeway. And literally, I feel like every month they have a different sale. Is that, is that really from your perspective, is that really something that can sustain or that a company can sustain and can use to continuously grow? Because from my perspective over time, it just devalues your brand.


Elaine: Yeah, that’s a that’s a great point. There are many different parts of that debate, which is very much a, it’s an ongoing conversation. Now, some argue that, you know, there have always been many deals, it just depends on, you know, where are you if you knew where to look for them, or, you know, if you took some effort and time to search for them. And then some argue that maybe there are actually very similar types of deals in terms of the actual discount percentages that consumers can enjoy. But the difference is, is that it deals now find a way to be much more in your face than they used to be previously, thanks to, you know, internet, social media and all of that. 


But what I would really want to emphasize here is that, you know, these types of events, yes, you know, long term, they may not be, they may not have the impact that retailers want. But I think they’re grabbing on to the current opportunity, which is, hey, if I don’t do it, someone else is going to, and sure enough, when someone else, you know, another retailer does, they’re quoting crazy numbers, you know, huge sales for their for the duration of that event. And so it kind of becomes a bit of oh, my gosh, well, you know, if so and so is doing it, I should match it, because otherwise, that will not only impact, you know, the opportunity cost for me, but I may actually lose money if I don’t. 


And so they’re very much becomes this kind of jumping on the bandwagon mob mentality of, we all have to make sure we’re staying in line with one another, to give the customer the best. So one retailer decides they’re going to have an event during this month, others may try to find ways to compete. And I think what has happened as a result is that the consumer has now you know, a lot savvier than the consumer that was, you know, let’s say 10 years ago. And I think we’re seeing a pattern of consumers who now know, when they want to splurge, and they’re planning for it. They still want the deal, but they are now planning for when they will splurge on that deal. 


And they’re not just looking at reviews of the product on your website, they’re comparing it to reviews of the same product on your competitor’s website. They’re not just looking at one brand, they’re looking at the whole category of brands before deciding which one they want to choose. There’s a lot more research that’s happening by the consumer. So one key difference between, let’s say, a successful deal event today versus 10 years ago, is 10 years ago, you could put a product on a highly trafficked website, put it on a promotion, let’s say you know, 15, 20% off, and the mere time sensitivity of that deal would result in a pretty successful sell through. And consumers to buy it, they would impulse shop that deal in the moment. 


Now, that is not the case. As we, you know, we saw last week, even with the new prime early access sale by Amazon. Amazon announced the event quite late into the game, it’s the first time they’ve ever had something like this. And unfortunately, the consumer adoption of the event was quite low, according to our metrics. And, you know, part of that is is that the consumer cannot be tricked into an impulse purchase the way that they used to be. Now, they want to know ahead of time, okay, I can expect, you know, these great deals happening during this time, this is what I’m going to buy, these are the brands I’ve researched, this is what I’m looking for. So just popping something onto them is not quite as effective as it used to be.


Steffen: Could it also be that there are too many sales events at the end of the day?


Elaine: You know, according to what sales look like, it doesn’t appear to be that way quite yet. It looks like you know, there’s quite a lot of interest in them. But I think it’s, you know, people want to know what they’re buying and have a plan for it ahead of time.


Steffen: Yeah, that makes sense. Now, you talked about motivation for retailers, why they would kind of want to extend this. You talked about a little bit of group pressure, right? If if my competitor does it, and I don’t do it, I might miss out on it if it is successful, so I’m following suit, so to speak. Are there any other reasons why retailers think extending the season will work? And why do they want it to work? Why do they want to give more away? I mean, you know, whenever you do a sale, it means you’re reducing your profit margin at the end of the day, right. Because you have to give up a little bit to create that excitement and that increased interest to buy a specific product.


Elaine: I think it’s two things. One is short term and the other is a much more long term play. The short term play being you know, there’s a lot of inventory sitting in a lot of warehouses right now. And we’re talking about inventory that you know, might have been sitting there from last year, or even older. And so before we get into the peak holiday season where there is newness, there are new products as the freshest, latest, hottest version of, you know, Product X, we need to get rid of products, you know, A, B, and C first. And so there’s there’s definitely a short term need for that. 


But I think the longer term need and why we have even larger events, not just, you know, hey, here’s a sale, but we’re talking huge events where millions of dollars of TV ads and, you know, campaigns are being driven for awareness, there’s a much more long term play to be gained from that, which is, we need the consumer to continue to come to us, and use us as the channel to purchase X or Y, or Z goods. And what we’re seeing is that consumer or sorry, the retailers are using these events to target different categories. Whether it’s, hey, beauty saw a huge lift, during the COVID period, especially in 2020, and has continued to grow quite a lot since then. 


You know, there are retailers who are focusing in on that and saying, hey, we’re going to take what is typically a down month for us a slower month for us, and we’re going to run a huge company wide event really focused on beauty products, in the hopes that not only will we gain short term sales and work through some of this inventory we’ve got, but maybe we’ll get new customers who may have not purchased beauty on our website before. And now they’ll start getting into the habit of buying this type of product from us. So maybe a month or two from now, when they’re shopping for holiday gifts for others, they’ll think about us again. And so there’s this longer term play for trying to get net new customers to start shopping on the platform as well.


Steffen: So basically, what you’re saying is, there’s also a big element of brand awareness there, you know, kind of trial as you you might not be able to buy us or they might have bought the products before but now that they’re discounted, you know, it might be ideal time to test the products, you know, and therefore create kind of a relationship, a stronger bond between the customer and the brand.


Elaine: Yeah, absolutely. And I think, you know, I think it’s also important to provide more context with that, which is, you know, 2020 really shook up consumer behavior for very obvious reasons. And as a result of consumer behavior getting shaken up, entire product categories, had to rectify all these changes. You know, if you’re used to seeing, you know, let’s say, consumers buying rain gear and rain boots during the spring season, when right before lots of showers may happen, but then suddenly, no one’s buying rain boots and rain coats because they’re all staying inside. 


I mean, that’s, that’s a huge shift. And it’s not, you know, not just one state or one city, we’re talking about the whole country. And so there are ramifications for the fact that, you know, many product categories saw a huge shift during that period. And although there is more of the quote, unquote normal behavior coming back, retailers have taken advantage of that huge shake up by making the shopping experience and the journey through the year more malleable. So if you think about the calendar year, we previously had, you know, maybe Mother’s Day, Father’s Day, and then holidays at some of the big events for the year shopping wise. 


Now you’ve got a major event that is driving traffic and driving conversion every single month. I mean, one of the last months that was left untouched was October, right. Outside of Halloween, a lot of categories are generally quite quiet during October gearing up for November, December. Now that’s not the case anymore. Now you’ve got these huge deals and massive events happening in October to start the holiday shopping season early. And if you even look at Nordstrom, JC Penney, Bloomingdale’s, you name it, they’ve all got strong deal language, or even holiday shopping language already on their website.


Steffen: Now, in order to have a flourishing ecommerce business, supply chain is something really important. Last year, obviously it was chaotic from a supply chain perspective. Do you see similar issues happening this year? Or is the industry out of that and then they’re smooth sailing?


Elaine: Yeah, that’s a great question. I think the short answer is yes. I think we will see some inventory supply chain issues this winter. It won’t be for the same reasons as last year’s, though. And it likely we think will not be as severe as it was last year. The supply chain issues that we’re seeing, or expect to see this year are an evolution from what happened last year. And so just, you know, kind of backing up, the reasons for last year supply chain issues, you know, were largely as a result of the physical difficulty of managing the capacity required to move all of the inventory that retailers wanted, right. There weren’t enough people there weren’t enough boats, there weren’t enough space on the boats, there wasn’t enough time. 


And on top of that, the delays, on top of the constraints themselves at ports. And so you know, there was a lot of the physical transportation difficulty that was holding up and causing a lot of those issues last year. This year, it’s a little bit different. This year, there’s actually more of a cash flow issue that is affecting inventory right now. Because, again, as I mentioned, there’s a lot of, you know, excess inventories and retailers, they’re trying to get rid of it, they have to get rid of it. And it’s difficult for them to justify taking in a ton of more inventory, before they’re able to get through what they’ve already got. 


And so there’s a there’s a bit of a difficult situation here where, you know, some retailers are saying, hey, I really want to get all of your new stuff in, but I have to get rid of the, you know, $5 million of old things that I’ve got here still. And I think, you know, they’re using the October deals as a way to try to alleviate some of that. But I think what a lot of them are choosing to do is go light, and say you know what I’m going to, I’m only going to buy one or two pieces instead of 20, right of each of the products that we talked about. And if we start selling through and see more demand, hey, I’ll come back and buy more. 


But I can’t make the same types of commitments that we’re used to making. And that’s that’s going to, that’s going to likely cause a bit of an issue when let’s say you have a really strong week or consumers start really picking up for the holiday shopping season, and then bam, you’re out of stock. And so I think that the supply chain issue will be felt by consumers, but it won’t be quite as severe as last year. And it’s, again, it’s evolved. The reasons that we’ll be causing it are different from last year’s.


Steffen: Now, during the pandemic, so the height of the pandemic, a lot of stores were closed, because, you know, people didn’t go out, they stayed home, which kind of impacted businesses quite a lot. A lot of brick and mortar businesses went online, because you know, that’s where the customers were. So they had to discover ecommerce, they had to set up ecommerce stores. How does it work? How do they fulfill, et cetera? Now, how do companies grow their ecommerce business beyond q4 2022? How and what do you suggest they should do to have a continuous growth for 2023 and beyond?


Elaine: Yeah, great question. So I think there’s so many ways to start answering that question. What I will say is that, you know, I think, I think the best way to try to start putting together strategy for growth is really reliant upon, you know, one, what product category are you in, because every single category does have a niche approach for getting their target consumer. Now I’m going to I’m going to speak to soft lines, you know, fashion and beauty because that’s, that’s what I primarily work in. And so if you’re talking about, let’s say, a new beauty brand, or new apparel brand, or whatnot, I think the best way to really start approaching that is, you know, one as a brand itself, who is your consumer? 


And what ideologies are you putting out there that will help that consumer start connecting with you relating to you. But on a more tactical level, the idea is, you know, I think we’ve seen a lot of success in baby brands who are just getting started in investing in higher funnel tactics, three to six months prior to their peak season, to really build and widen their consumer funnel, and then spend shifting that spend into lower funnel tactics for conversion once they get into the peak. 


And so I think, you know, I think historically, we’ve seen a lot of strategies where you, you continue to spend on higher funnel tactics and lower funnel tactics at the same time, and almost equal spend, peak spend during that peak season. And now we’re actually very much shifting away from that, and gearing it out in phases where there’s a lot more attention and money being spent many months before peak season happens on that higher level funnel widening and then shifting that towards the lower funnel during the peak. 


And that’s been incredibly effective, especially for ecommerce. And so I think there’s obviously a few different ways we can talk about it. You know, one is on the more ideological side, which is as a brand, which should you be doing to just build your consumer profile and make a consumer interested in you. So there’s that conversation. But then there’s also, of course, the marketing and more tactical side, which is, what do we have to do to get their attention and then bring them in for conversion?


Steffen: Elaine, before we come to the end of today’s podcast episode, what do you see successful fashion and beauty brands do online?


Elaine: I would say, you know, this might be a little unintuitive. But we’re seeing a huge demand and a lot of efficacy coming from research. And of course, speaking from you know, our experience, but it’s becoming even more important now for brands to understand, what do you really know about how your category is performing? It’s not enough to know that, you know, as a brand, you’re growing, let’s say, 45%, year over year. When in reality, your category might actually be growing 67%, year over year. 


So understanding okay, what is that gap, if there is one? And then what is the difference? What is the category or some of the leaders and competitors in the category doing that perhaps you’re not? And how do we start adjusting or, you know, including that as part of the strategy. And so I think the bottom line is there’s a lot more research, a lot more information, key insights that are being requested and being created as a result. Because as you mentioned, you know, there’s so much more emphasis and importance on succeeding within the ecommerce space now more than ever. 


So, you know, I think understanding the research component is something that, again, was something that, you know, only the biggest brands with the most resources, was interested in investing in, let’s say, you know, 10 years ago. But now we’re seeing as part and parcel as one of the most commonly requested and in demand parts of the relationships that we have with brands and helping them grow.


Steffen: Elaine, thank you so much for joining me on the Performance Delivered podcast and sharing your knowledge on you know, the retail trends and expectations for q4 2022. If people want to find out more about you and Kwontified, how can you get in touch?


Elaine: My inbox is open. Email address is elaine@kwontified.com. You can find us through our website kwontified.com, as well as please feel free to connect with me on LinkedIn.


Steffen: Perfect. Well, thanks everyone for listening. If you’d like the Performance Delivered podcast please subscribe to us and leave us a review on iTunes or your favorite podcast application. If you want to find out more about Symphonic Digital, you can visit us at symphonicdigital.com or follow us on Twitter at Symphonic HQ.. Thanks again and see you next time.


Voiceover: Performance Delivered is sponsored by Symphonic Digital. Discover audience focused and data driven digital marketing solutions for small and medium businesses at symphonicdigital.com