According to a recent study, 46% of consumers plan to start their holiday shopping before Nov. 1. Prepare to man your battle stations – the holiday shopping season is upon us!
To satisfy consumer demand and expectations this holiday season, retailers must determine what the customer wants, when they want it, to make it available via the channel they want, at the exact moment they want it. As retailers know, while this is imperative, it’s also an exercise fraught with peril due to the many factors and considerations that come to bear. Last year for example, in the critical weeks leading up to Christmas Day, retailers (especially apparel) were derailed by a number of factors, including warm temperatures.
To this end, the task of getting holiday assortments aligned with merchandise supply and customer demand can seem downright overwhelming. How do I avoid inventory stock outs and overstocks? What about dealing with “surprises” such as weather and economic conditions and meeting ever-changing consumer fads and trends that can further complicate demand forecasting and inventory allocation?
Considering holiday merchandise is generally procured 9 to 12 months in advance, the majority of the assortments that will ultimately be delivered are already planned, produced and on their way to the warehouse for downstream allocations. Reordering goods and/or changing print marketing at this stage is next-to-impossible. And while retailers with physical and online stores have the option to move inventory between stores and online channels – it’s not a fail-safe means to make up for planning and allocation mistakes, as it can be incredibly costly.
So what can retailers do at this late date to optimize merchandising allocations to align with consumer demand? First off, be proactive and move fast. Keep in mind, as each day passes, you lose the flexibility to affect change which can have dire bottom line consequences.
This is where advanced analytics shines – providing the means to quickly identify trends, opportunities and instances where actual demand is diverging from plan, to deliver critical insights necessary to revamp retail strategies to make the most of the holiday shopping season.
Advanced analytics gives retailers the power to understand trends and adjust assortments to meet consumer demands just in the nick of time. In the short but critical holiday shopping season, this gives retailers the ability to proactively ensure the holiday shopping season is a productive, profitable and most wonderful time of the year.
Here are some 5 analytics-driven strategies that retailers can employ to meet holiday shopper expectations, and optimize sell-through and margins:
Focus on Customers that Matter
Focus your efforts on those customers that shop often, at full price and provide the highest value (versus those that rarely shop and only buy clearance merchandise). Advanced analytics shows which customer segment is buying each product category and how often they are responding to promotions. By targeting marketing efforts on these customer segments, you can use your marketing dollars wisely to pursue your greatest sales opportunities and cater to those customers you want to continue to cultivate.
Advanced analytics, including exceptions such as those generated from “Retail Exception Engines” (stockouts, imminent stock outs and overstocks), can help retail allocations teams determine what locations need more, less or different product from the Distribution Center. These metrics can be applied to both brick & mortar stores as well as eCommerce channels.
Dive into the Details to Crack the Assortment Code
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 perhaps sales peak only in November, or only in certain stores.
Since sales figures are often averaged across the store fleet and/or channels, sans these granular details, retailers can often miss solid opportunities to move inventory and meet customer expectations. Advanced analytics can help retailers unearth these opportunities to properly assort each store to meet the specific needs and trends of their customer base that can vary by location.
Get Savvier In-Store
In-store analytics deployments fly in-the-face of a decade-long trend in reducing the amount of information passed along to stores. Now, armed with real-time sales information, store managers are empowered to understand the overall efficacy of their efforts – what’s selling in their store versus other stores, how their store is different than other stores in the fleet, etc. Leveraging this insight, store managers can execute different promotions and merchandising schemes to proactively manage operations to improve store sell-through and customer engagement.
Start Thinking About Holiday 2017/18
The time to start planning for next year’s holiday shopping season is as soon as you close this one. 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 and expectations.
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 demand.
Nick Leeper is director of Product Management at Aptos, Inc.