Passing prices to the consumer
Yet even as brands save money on ad spending, increased shipping costs are still forcing some brands to raise their own prices in order to stay in business. For example, National Tree raised its prices by 25% this year.
State also raised prices on adult items ahead of its back-to-school season this year to offset the shipping costs, Tatelman says, noting that the increase was done on a product-by-product basis and ranged from 5% to 12%. She expects to have to raise prices for kids’ products as well, even as State begins selling new adult products like fanny packs and diaper bags this holiday season.
“I’m going to be selective on what we raise prices on,” she says. “We’re being very strategic on that, but we do have to pass some of the costs on—we won’t survive if we don’t.”
With delays, State already had to offer some back-to-school items for “presale,” which meant focusing more on customer service for potentially angry customers wondering when to expect their purchases. It’s a process Tatelman doesn’t want to repeat for holiday and next year, so she is adjusting her calendar to account for delays by ordering merchandise earlier—yet that means marketing needs to be ahead as well.
“We have to make sure we have the money to pay for those things,” she says.
Some marketers are moving into more flexible forms of advertising in order to have better control if inventory is late. Spin Master, the Toronto-based toy company behind hits like Hatchimals and Kinetic Sand, is currently working with logistics carriers to try to move goods in earlier and get them onto store shelves, according to executives speaking on the company’s most recent earnings call. The pandemic taught the company to be digital-first with marketing, and Spin Master has spent the time building in-house capabilities to “enable insight, speed and agility,” says Laura Henderson, executive VP, marketing. “This transformation has prepared us well to be nimble in our response and adapt our marketing to the changing retail dynamics and preferences of our core consumer, reaching them with the right message, at the right moment, in the right medium.” She notes that several of Spin Master’s campaigns this fall are 100% digital.
Elaine Kwon, a former Amazon executive who co-founded e-commerce firm Kwontified, says there are a lot of “competitive conversations” happening regarding holiday marketing right now, which will result in earlier advertising as brands try to convince customers to buy now or risk losing out on out-of-stock products. Holiday refreshes, which involve a holiday-themed makeover with specific banners and images on websites and social media accounts, are occurring as early as September for some brands hoping to get the consumers in a holiday-buying state of mind. Such refreshes usually take place in November, Kwon says, but are earlier because of the inventory shortage. Brands are trying to sell what they have to avoid losing out to rivals.
“They’re trying to target and get consumers to think about things before the holiday period truly begins,” she says. “They fear that if they do not do this they’ll fall behind.”
Kwon also predicts that brands will be offering fewer seasonally appropriate products and limited edition items as another result of the supply chain disruptions. Instead, brands will market the tried and true bestsellers that they always have in supply. For example, skincare brand Tula is currently selling two limited-edition kits and seven kits that while marked as “new,” are also bestsellers. In previous years, Tula has sold numerous holiday-specific, limited-edition kits, Kwon says.
“You’re going to see a lot less curated, limited-edition products, a lot more of this is our number one best seller last 10 years this is what we have in stock,” she says. “We’ll see a more narrow general section of products available.”