Technology and the Christmas Season – Are you on the front foot?

Q4 is a busy one for retailers, with Black Friday, Christmas and of course New Year, being just a few of the key shopping peaks retailers will need to deal with. The tight margin, and cut-throat nature of retail means tensions will be high as retailers look to secure the best revenues they can across the period. But of course, as we all know, revenue and profit are two very different measures of success!

It is a critical time of year, and many of the decisions about which trends to follow, lines to stock, price points and margins, will have been made anything up to nine months ago. Now those decisions will be tested in the most intense trading period of the retail year.  

The reality of the situation is that for most retailers they have already made or broken their Q4 trading period before so much as a Halloween costume leaves the shelves. Those decisions made all the months ago will have been informed by intense market analysis, negotiations with suppliers and what they believe to be a clear understanding of customer wants, price sensitivity, and their own goals. Technology will have played a key role in this, analysing customer behaviour, category and general business performance in comparative periods.

Yet when it comes to opening the doors on Q4, the role of technology to better influence operational and financial performance over the season is less well understood. The fact is, applying the right technology can save a season, reduce the chances of retaining large amounts of stock, and increase sales and margin performance.

Clean data

Underlying this is the need for data that accurately reflects the business and is available in as near to real-time as possible. Achieving that means having ‘clean’ data that is connected across your different IT systems, from marketing to finance, sales and warehousing.  It should be possible to see the performance of the business at a high level, but also drill down into analyse the behaviour of customers and the journeys they take online and in store.

Customer insight applications, personalised marketing, category management and pricing optimisation are all technologies that are critical to effectively managing these critical trading periods. Not simply because they allow you to analyse what is happening in the business at any given moment, but because they allow you to proactively influence the outcome of your season, not simply be voyeur to your own success or demise. They will help you understand the different triggers in the business that can be tweaked to affect change, both operational, and in terms of customer behaviour.

Some of these triggers are focused on the operational needs of the business:  Are we going to miss sell-through targets for seasonal lines? Is there a high demand line, that we are not going to have enough stock of? Do we need to start Return to Vendor negotiations for certain SKUs? Others relate to external data points, how is the wider market performing, and what promotional activity is taking place that may impact us? And finally, how is the customer reacting to the promotional activities we are putting in place?

Accessing data

The challenge for every retailer is how easy is that data to get to, and how much effort does it take for it to be manipulated in a way that allows them to undertake predictive forecasting, and model decisions before taking them? If it takes a week to assemble a dashboard, it is too long. Arguably, every day lost to preparing analysis is a lost opportunity to improve the performance of the business.

If a retailer is not already using technology to influence the outcome of this season proactively, then outcome is already decided, and it’s out of their control. But remember, no technology is a silver bullet, it takes hard work to get the best from them, with the right people, processes and corporate culture in place. Start thinking about how you can have better control of your 2019 seasons now through technology, or do you want to face another year where you just stand back and hope?