By Hamaad Chippa, Informatica
Over the past 10 years, retail revenues during the holidays have grown at a respectable 2.5% on average. As of 2009, the year the economic recovery began, the average growth was approximately 3.4%. This year, NRF forecasts that retailers can expect a growth of 3.6%, resulting in record revenues of $655.8B. Cha-ching!
From an economic point of view, consumer confidence is strong due to positive employment and wage numbers and any uncertainty from the presidential election will have subsided with votes finally cast and the outcome decided. While retail sales have been slow earlier in the year, these optimistic indicators are pointing to a big holiday season for retailers.
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To ensure retailers cash in on the expected bounties of this holiday shopping season, it would serve them well to manage and analyze key data elements on customers, products and suppliers. The ability to understand customer needs, plan inventory to meet demand, and make purchasing as simple as possible will separate the winners from the losers.
Rewarding Valued Customers
Retailers need to understand their customers’ needs, plain and simple. One effective way to do that is to scrutinize their current relationships:
- What have they bought in the past?
- How much money have they spent?
- Where do they like to buy, in-store or online?
- Do they like your products / services?
Answering these questions and going one step further to map this data to social media information will allow retailers to better identify marketing, sales and product development plans. For example, knowing that customers have redeemed an exclusive online offer for 15% off purchases over $100, or used free shipping codes more than any in-store offers, can signal a need for a deeper digital marketing approach.
Retailers can also better reward loyalty by emphasizing offers and deals to their most valuable customers. November and December account for approximately 20% of total retail revenue and also have the biggest in-store traffic days of the year. This means long lines to get into stores and long lines at the checkout counter. Sure, some retailers allow customers to opt-in for savings opportunities pushed to their mobile phones, such as Kohl’s and JCPenney, but imagine if retailers reached out to a special subset of customers and offered them separate and unique offers or provided an opportunity to skip the long lines with a pass or barcode scan.
A Seamless Product Experience
As e-Commerce sales continue to rise, establishing a digital presence consistent with other retail channels (stores, catalog, etc.) will be important. The NRF believes online sales will increase 7%-10% from last year, meaning providing a seamless online experience is vital to sales conversions.
A main focus of this experience should include providing clear and robust product information. Outside of web site navigation and cost concerns, lack of consistent product data and images are top reasons customers often abandon carts.
Retailers need to be vigilant and ensure that information represented in-store and online are the same and that enough description is provided online so customers feel confident that they understand the product they will be receiving. After all, it’s anticipated that 66 cents of every dollar spent this holiday season will be influenced by digital interactions.
Trusted Supplier Partnerships
Planning for the holiday seasons starts early. Most organizations are thinking about the next holiday shopping season as soon as the new year hits. One of the first steps in planning is identifying key partnerships with suppliers that can deliver quality products, on time with consistency. Analyzing historical data can be helpful to identify where suppliers rank and what key decisions need to be made to guarantee the right product is in the right place at the right time. Some of these key data points are:
- Percentage of on-time delivery – if the supplier was late often, relying on them during the critical holiday period won’t bode well;
- Quantity ordered vs. quantity received/Fill rate – can lead to lost sales if supplier cannot deliver to demand;
- Lead time variance – properly planning delivery can impact cost and sales dramatically. Get products too early and that will eat into your profit margin; receive products late and sales will suffer; and
- Return rate/Failed Items – provides insight into the product quality.
Managing key data points can help retailers maintain effective supplier scorecards that will make planning more efficient. Profit margin and customer satisfaction depends on it.
Holiday shopping brings about a lot of excitement, but also tension for retailers looking to capture sales in a supremely competitive environment. By determining which customers, products and suppliers mean the most and leveraging data to answer important questions — who are my most valuable customers, what products will be in demand, which suppliers can I trust to deliver quality goods on time? — will guarantee retailers have a most joyous holiday season.
Hamaad Chippa is part of Informatica’s Industry Consulting practice, responsible for identifying data management challenges, trends and best practices in the manufacturing and retail/CPG verticals. He also helps organizations understand the value improved data can have to important revenue, cost, margin and efficiency drivers. Prior to Informatica, Chippa spent 10 years as a management consultant professional, specializing in providing leading-edge insights to help clients transform their businesses and attain high performance capabilities.
