Well, it’s officially the fourth quarter, which is a critical time for retailers and brands as it’s a make-or-break time that hinges on a variety of factors, from the current state of the market to the mood of the consumer. This year, a looming recession is also causing concern.

As part of a series of reports aimed at offering small- to medium-size businesses a competitive edge this quarter and holiday shopping season, WWD gathered insights from solution providers and industry advisors on how to drive conversions — in-store and online.

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Lisa Bougie, a strategic adviser and former Stitch Fix C-suite executive and Nike general manager, now is the time for SMBs to stay calm and don’t overreact. “Be extremely methodical about any changes you make and be certain they’re not knee-jerk reactions,” Bougie told WWD. “In the face of unforeseen financial challenges, re-forecasting may be necessary, but it needs to be done at a reasonable and clearly defined cadence. Otherwise, you wind up in a constant state of re-forecasting, re-strategizing, and replanning, never giving teams a chance to actually execute the new plan and see results.”

It’s also critical to adjust inventory volume and not pricing, Bougie advised. “There may be a case for repricing on commodity products that are competitive and aren’t backed by innovation and uniqueness,” Bougie explained. “However, if you are a premium brand that solves customer pain in ways that are truly differentiated, this might not be the right path. You need to preserve the advantage of those distinctions. Recessions are short-term, cyclical events. Come at them from a position of strength and know your value.”

Staying calm and not overreacting requires a cool head, which will help SMBs better navigate uncertain economic times. Tim Janaway, a former general manager at Adidas and a strategic adviser, said, “It’s common in tough times to see messages from boards like, ‘Cut 20 percent in operating overheads in all functions, markets and categories.’ Economic uncertainty can result in broad, relatively crude actions. Strategy is often put on hold, and the mood becomes one of survival.”

“In hindsight, I would recommend a much more differentiated approach,” Janaway said. “Instigate these cost controls, of course, but then decide where to attack, where to defend, and where to exit as initiatives align with your overarching strategy.” Janaway said businesses need to save as much as possible “when you are in the position of exiting or defending, but try to manage some investment or at least maintain resources in areas where you are confident in your ability to attack.”

“If you can’t afford your original strategy, then reevaluate, adjust it and adapt,” Janaway said. “Focus on where it makes sense — not across the board.”

Brian O’Malley, a managing partner at Forerunner and a 20-year career veteran in Silicon Valley, recommends that brands adopt a consumer-obsessed approach to product creation. “Instead of trying to innovate and sell your way out of an economically challenging time, go back to your core customers and understand their own struggles,” O’Malley said. “What is going on in their business? Where are the dollars flowing? How do they keep their jobs? So frequently we can get wrapped up in our own mess that we forget who we’re really trying to serve and how they need us to show up in their lives.”

O’Malley also warned of the pricing trap and said brands need to be careful “not to chase their plans with excessive promotions. First off, this has a negative brand impact. Second, it can train customers to buy on discount, which can permanently damage margins. And third, it can attract a clientele that won’t be as sticky as existing customers. It’s better to take the plan and cost structure down a bit than do unnatural things to preserve a revenue number.”

Chris Hull, senior vice president of men’s at Rothy’s, recommended making SKU rationalization a top priority as well as tightening lines as much as possible to avoid over-assortment. “Having the right product mix is more important than ever,” Hull said. “Be extra diligent about making sure that every new product you create fills a specific and important role in the line, that there is demand for it, and that you have the data to back it up. Then take it a step further and drop any popular styles that appeal to the same audience and will likely wind up cannibalizing each other’s sales.”

“The goal is to reduce risk and increase line efficiency by maximizing appeal across consumer segments with the smallest number of high-performing SKUs possible. Less is more in a recession,” Hull added.

SKU rationalization is clearly a discipline, but it could get corrupted by inventory disruptions. Mark Simon, chief technology officer at Celigo, said SMBs need to think long-term. “Persistent supply chain bottlenecks have motivated many retailers to shore up inventories earlier than usual to ensure physical and virtual shelves are stocked during the critical sales season,” Simon said. “However, slumping demand from inflation-hit customers has caused goods to pile up, and businesses are resorting to ad-hoc strategies, such as price cuts and stashing inventory in transport equipment, to manage excess inventory.”

“While these approaches may provide retailers with short-term relief, they will ultimately create compounding consequences that exacerbate the strains in already-stressed supply chains,” Simon said, adding that any changes made to alleviate immediate pain “should also take into account long-term impact, and preference must be given to priorities that put you in a position to scale your business, improve the customer experience and generate revenue in the long run.”

Simon said while larger projects may be needed to generate a big long-term impact, “don’t overlook lower-risk, smaller opportunities to improve operational efficiency and customer experience as long as they fit into your larger strategy.

Regarding customer experience, marketing and shopper engagement, Saranya Babu, chief marketing officer of Cloudinary, told WWD that as online shopping overtakes in-store shopping sales, “small businesses heading into the holiday shopping season should embrace the trends that are driving next-generation e-commerce.”

Babu offered three strategies and approaches to engage shoppers better. The first is to harness the power of visual media. “E-commerce sites need to provide engaging visual experiences to online consumers to capture their attention, give them a deeper understanding of products, and help them make purchasing decisions,” Babu said. “To do this, businesses can implement 360-degree views of products or add augmented reality features to let shoppers experience and visualize products in their homes.”

Babu noted that while managing the images, videos and product information required to do this “can be a laborious and time-consuming process, it doesn’t have to be. An AI-powered digital asset management solution can automate and optimize the delivery of brand assets across different channels.”

Babu also suggested leveraging personalized and shoppable videos. “With the popularity of TikTok and Instagram Reels, businesses should look to leverage interactive videos in their strategy,” Babu explained. “But with so much content available online, it’s become increasingly difficult to reach and grow an audience. That’s why personalization is key for businesses to stand out. For video, this can include zooming into specific areas of the product based on what you know about a viewer’s interests, purchase history, or location. Or having custom captions overlaid on the video, which can be personalized to a specific language or currency based on the viewer’s location.”

Babu also said SMBs could tap into the value of micro-browsers and peer referrals. “Micro-browsers are the miniature previews of site content we see in text messages and messaging apps like Slack, WhatsApp and Facebook Messenger when links are shared,” Babu said. “With more consumers shopping on their smartphones than ever — and as shoppers share product recommendations and holiday wish lists with their friends and family — businesses should tap into the value of micro-browsers.”

Using data can also improve customer engagement and conversions. David Chinn, chief executive officer and cofounder of Lexer, said SMBs need to improve their marketing relevancy. “In order to successfully segment your customers, you must first break down any siloed customer data sources into a single customer view,” Chinn said. “With this single source of truth, you can now understand the entire relationship you have with each customer.”

In closing, Robert Gilbreath, general manager at ShipStation, said it is important that SMBs “brace for a holiday season different from what they’ve experienced over the past two years. Understand that this year, the ball is in the consumer’s court. From 2020 to 2021, consumer demand outweighed merchant inventory and supply chain capabilities, contributing to high sales and low product stock. Now, that uptick in demand could sharply decline due to inflation and consumers’ preference to save this holiday season. The apparel industry is poised to take a hit from this.”

Regarding fulfillment, Gilbreath said SMBs need to also be prepared for heightened consumer expectations around returns. “Fast and free shipping is already the status quo, and attitudes toward returns are quickly following suit,” Gilbreath said. “A returns policy impacts whether a consumer even makes a purchase in the first place. Consumers want to buy multiple sizes or colors of an item online and then use free shipping to return what they don’t want.”