It’s that time of the year again. But this year, things are going to be different. This year, you’re going to do your research, shop early and not wait until the last minute. For retailers, it’s a similar challenge: to make the most of the season by developing a plan and executing on a strategy that satisfies shoppers’ wish lists and keeps them coming through their doors or to their site.
At first glance, the challenge seems overwhelming and riddled with endless questions: How do I figure out what the customer wants, when they want it, and make it available via the channel they want, at the exact moment they want it? And how do I do this while avoiding inventory stock outs and overstocks? What about unwanted “surprises” such as weather and economic conditions and ever-changing consumer fads and trends that can further complicate demand forecasting and inventory allocation?
The fact is holiday merchandise is usually procured 9 to 12 months in advance. This means the majority of the assortments that will ultimately be delivered are already planned, produced and possibly on its way to the warehouse for downstream allocations. Unfortunately, the possibility of reordering goods at this point or changing your print marketing is unlikely. And while retailers with physical and online stores have the option to move products between stores or online – ala omni-channel retailing – this is no panacea for planning and allocation mistakes, as it can be incredibly costly.
So what can a retailer do to ensure this doesn’t happen? Start by doing something NOW and not waiting (remember what happens when you wait?). As each day passes, you lose the flexibility to affect change and may even hurt your bottom line. This is where advanced analytics comes in. The ability to quickly identify trends, opportunities and instances where actual buying is diverging from plan, delivering critical insights to help retailers revamp their retail strategies to make the most of the holiday shopping season.
Here are some analytics-driven strategies that retailers can employ to meet holiday shopper expectations, and optimize sell through and margins:
Focus on High-Value Customers: Savvy retailers know they don’t need to cater to every customer – just those who shop often, at full price and provide the highest value versus those who rarely shop and only buy clearance merchandise. Advanced analytics shows which segment is buying each product category and how often they are responding to promotions. Lock and load marketing efforts on these customer segments as they represent your greatest sales opportunity and are the customers you should work hardest to keep engaged.
Improve Responsiveness Through Smarter Distribution: Advanced analytics, including exceptions such as those generated from “Retail Exception Engines” (stockouts, imminent stock outs and overstocks), can help retailers’ allocations teams figure out what locations need more, less or different product as they are pushing items out of the Distribution Center. These metrics can be applied to both brick & mortar as well as eCommerce outlets.
Delve into Detail: Advanced analytics delivers business intelligence on real/actual sales opportunities and liabilities on a highly granular level. For example, historically a retailer may have high sell-through rates on product, but maybe sales peak only in November, or only in certain stores.
And because sales figures are often averaged across the store fleet and/or channels, without more granular detail, retailers can often miss solid opportunities to move inventory and meet customer expectations. Advanced analytics can help retailers unearth these opportunities to property assort each store to meet the specific needs of their unique customer base.
Get Smart In-Store: The deployment of in-store analytics bucks a decade-long trend in reducing the amount of information passed along to stores. By making information available to store managers, they are now empowered to understand the efficacy of their sales efforts. Leveraging this real-time insight, store managers can execute different promotions or different merchandising schemes to proactively take the necessary steps to improve store sell-through and customer engagement.
Start Planning Next Year: Consider the 2017/2018 holiday shopping season at the close of this season. Performance is only as good as the prep/plan. Look for ways to put the customer in the center of the planning process; customer-centricity begins with buying. And to this end, the more you can leverage analytics, the fewer assumptions you’ll be forced to make, and the more aligned you’ll be with customer needs.
To assort with confidence, in the lead up to next year’s holiday shopping season, leverage eCommerce channels to test styles and colors and use these insights to expand brick & mortar assortments based on product uptake.
Retailers heading into the holiday shopping season must leverage every customer interaction and every inch of real estate; advanced analytics can help ensure they have the right “goods” to fulfill each and every customer’s holiday wish.