7 strategies to beat the post-holiday sales slump

[Updated post from December 29, 2021]

With holiday and Christmas sales responsible for a huge chunk of retailers' revenue, it's not surprising that the post-holiday period is marked by a major drop in sales activity. 

Once the gift-buying frenzy is over, consumers are less likely to be browsing e-commerce websites or visiting stores. As a result, many merchants find themselves experiencing a noticeable dip in sales during Q1.

While it's difficult to forecast what Q1 has in store for 2023, ongoing inflation is starting to constrain consumer spending. The Conference Board's consumer confidence index fell to 100.2 in November, the lowest reading since July. While some consumers may be hoping for better deals in the New Year, sales activity has the potential to be stifled further.

How do you beat the post-holiday retail slump?

With peak season building into a crescendo in later December, it's pretty much inevitable that sales are going to drop somewhat during the first week of January and beyond. With consumers having exchanged gifts with loved ones and completed their holiday shopping marathon, it's hard surprising that many shoppers are keen to catch a breath. And with many consumers taking on high levels of debt to cover their holiday expenses, January is a key month to catch up on paying off credits cards or BNPL accounts.

So, what can businesses do to prevent customers who flocking away and not returning?

Rather than hoping that shoppers will come to you, brands need to take a proactive approach to encourage post-Christmas sales and use a variety of levers to build demand. When shoppers aren't in the mindset of getting ready to buy, you need to prove to them that it's worth their while to pay attention to your activities.

Here are 7 strategies that brands can use to boost sales after the holiday season:

1. Increase cross-selling suggestions

Cross-selling is when ecommerce retailers present visitors with product recommendations during the shopping journey. These suggestions are usually based on items that shoppers have recently browsed, or that are complementary to those already placed in the shopping cart. 

The goal of cross-selling is to increase product discovery opportunities and entice customers to purchase additional items, thus increasing Average Order Value and generating additional revenue. A study by McKinsey found that cross-selling strategies increased sales by an average of 20% annually, which makes a significant difference to your bottom line during post-Christmas sales.

Cross-selling has another benefit in the form of lowering fulfillment costs. If customers are purchasing multiple items per order, this means huge savings on shipping and packaging costs, which means stronger profit margins.

There are several methods that your business can use to cross-sell, such as:

• Best-selling cross-sells
• Complementary cross-sells
• Impulse cross-sells
• Bundled cross-sells

2. Selling off excess inventory

Taking a ‘just in case' approach to holiday stock is a good strategic move, as high demand typically kicks in at the beginning of Q4. But on the flip side, retailers can find themselves with seasonal items that are difficult to shift when the New Year begins.

Excess inventory has a variety of causes, from poor demand forecasting to SKU proliferation. But the holiday season itself is one of the biggest reasons why retailers can find themselves with too much stock on the shelves after Christmas sales.

From holiday decorations to wrapping paper and artificial trees, a lot of holiday items have a very limited shelf-life once late December has passed. If you want to prevent excess holiday inventory from becoming dead stock, you'll need to act quickly.

On the upside, excess inventory creates opportunity for retailers to clear out their shelves to offer something fresh in the New Year. Here are some of the best ways to tackle excess inventory after Christmas sales:

Discounts. Putting deep discounts in place is a great way to clear out holiday stock. However, you need to be careful not to exacerbate the problem by ‘training' customers to wait for post-holiday season sales.

Product bundling. Bundling is a highly effective technique to improve the value proposition of slow-moving items. By pairing less popular products with those in higher demand, this offers a more profitable way to remove clearance items.

Gift with purchase. Another option is to repurpose excess inventory as a gift with purchase or social media giveaways. For example, adding some leftover holiday candy to your online purchase is a nice surprise that's sure to leave customers with a positive impression of your brand and drive enhanced feelings of customer loyalty.

3. Bring in some fresh inventory

Shifting your excess holiday stock should be combined with filling the shelves with new products that fit your customer's needs this side of the holiday season. After all, no customer wants to visit their favorite online store and see only discounted holiday decorations on the home page. Announcements about fresh stock landing in your customer's inbox or social feed is one of the best ways to increase sales without handing out discounts.

A good place to start is with your sales data from previous years, which will help you to understand which products typically perform well after Christmas sales. Consider how the New Year is often characterized by the desire of consumers to explore new things and find the best version of themselves. Plus, if consumers didn't receive the gifts they really wanted during the holidays, this is the prime time for them to put together their own wish list.

4. Launch new loyalty promotions

Launching some fresh perks for your loyalty reward program after Christmas sales has two key benefits. In the short term, programs offer brands a lot of levers to pull when sales start to slow. But over the long-term, a spate of member-only promotions and perks raises awareness that customers can get the best deals by joining, helping to drive more sign-ups.

There are some loyalty offers you could consider launching after the winter holidays have concluded:

• Limited-time double or triple points on purchases
• Free shipping
• Early access to clearance sales
• Invitations to exclusive in-store events
• Free gifts with purchase

It's worth remembering that today's consumers are showing an increasing preference for experiential, rather than discount-based rewards. According to Clarus Commerce, the amenities that would motivate customers to join a loyalty program are:

• Instant discounts (67%) 
• Faster/free shipping (61%)
• Free giveaways (56%)
• Surprise rewards (49%)
• Exclusive deals (43%)
• Personalized offers (30%), 
• Exclusive in-store experiences (22%)

Sephora's Holiday Savings Event is a great example of how to reward loyalty members while publicizing the benefits of your program. Their highest ‘rouge' tier gets the biggest discount and the earliest access to the sale, while their lower tiers get less. Showing both members and non-members what they could be eligible for is a powerful motivation for all customers to spend more.

5. Host a flash sale to encourage impulse purchases

Sometimes, discounting inventory is simply not enough to drive consumer interest after holiday sales have been and gone. Having already experienced the likes of Black Friday and Cyber Monday, so-called ‘deal fatigue' can set in and make consumers much less responsive to offers. 

This means that items end up getting relegated to a sales section in your store or on your e-commerce website, where they can end up gathering dust. Instead, you should consider launching a flash sale after the holidays to help drive urgency to purchase.

A flash sale is when a retailer offers a substantial promotion for a short time period, usually 24 to 72 hours. This usually involves deep discounts, free shipping, and/or additional perks such as gifts with purchase. 

Using a limited time window helps to spark FOMO in customers, who don't want to lose great sales and deals. This makes flash sales perfect for times like the post-holiday season when sales are sluggish. Moreover, they are a low-stakes way for new customers to try out your brand in the New Year.

However, it's important not to use flash sales too often, or you can end up sabotaging your own promotions; if customers know that another great offer will be on its way after the holiday sales, they have even less incentive to make their next purchase.

6. Invest in your social commerce strategy

As commerce becomes increasingly digital, how consumers discover products and brands has changed dramatically. According to a survey by Statista, 58% of millennials and 54% of Gen Z believe that social media platforms are better for finding products than online search.

Social commerce is a sales strategy where brands can market and sell products directly through social platforms such as TikTok and Instagram, rather than redirecting customers to an e-commerce website to complete a purchase.

Keeping consumers within their chosen app for the entirety of the shopping journey enhances convenience and reduces the odds of sales being lost due to channel switching. Moreover, social commerce offers a far more organic way for shoppers to discover products - even when they aren't looking for them. Rather than relying on consumers walking into your store, social commerce enables brands to reach customers where they already are.

Capturing someone's attention mid-scroll with a beautiful product spread, as shown here by Anastasia Beverly Hills, can be all it takes to spark curiosity to check out a brand's in-app store and boost impulse purchases, which is especially valuable after Christmas sales have concluded.

7. Incentivize holiday shoppers to exchange products

The toughest part of the post-holiday sales period isn't just slower sales; it's the boomerang effect of all those unwanted holiday gifts flying back into your warehouse. 

For the 2022 holiday season alone, NRF is predicting an average return rate of 17.9% for merchandise bought during the holiday period. In sum, post-holiday returns can end up compounding the post-holiday slump – and this doesn't spell good news for your business.

It's inevitable that consumers are going to want to return items after Christmas sales. After all, not every gift is the perfect gift. But trying to dissuade shoppers with an overly complex return process is only going to hurt your reputation and increase customer churn.

By making exchanges easy, you can turn your return process from a hindrance into an opportunity to recapture lost revenue.

Return automation platforms such as Loop and Returnly enable brands to build return workflows according to their own specifications, including what items are eligible for a refund and even providing suggestions to replace returned merchandise. If an item is being returned due to being the wrong size or color, these platforms can arrange a replacement with a single click.

In sum, by making exchanges more convenient than returns, you can retain more post-holiday revenue and create more seamless customer experiences.

The post-holiday slump is a tough period for retailers, especially when paired with the peak return season. But -post-holiday selling isn't just about deep discounts; it’s about ensuring that you provide customers with the right product recommendations and perks to make the shopping experience enticing. By following the selling strategies we've outlined above, you can transform Q1 from a sluggish start to an opportunity to capitalize on New Year purchasing behaviors.