How to Plan for Exceptional Christmas Performance

There’s no rest for retailers in the runup to Christmas. As competition crescendos, both on the high street and online, preparing for the busiest period of the year has never been more critical.

Preparation is key. From forecasting and ordering to warehouse and supply chain. Anticipating your pain points and putting proactive solutions in place to resolve them is critical to exceptional Christmas performance.

We look at how technology can help you capitalise on the busiest shopping months of the year.

Understand the Retail Landscape

With Black Friday and Cyber Monday firm favourites among consumers, Christmas shopping now starts in November. According to the Office for National Statistics’ Senior Statistician, Rhian Murphy, in 2017:

Black Friday & Cyber Monday

“Consumers continue to move Christmas purchases earlier, with higher spending in November and lower spending in December than seen in previous years.”

Where Christmas could once be relied on for phenomenal year-on-year growth – 2016 was up 4.7% on the previous year – economic uncertainty saw retail sales increase by just 1.9% in 2017. The lowest annual growth since 2013.

This data paints a picture of increased competition and consumers looking to make their money go further. Yet despite the challenging conditions, certain retailers have outperformed their competitors with better growth figures.

Take online-only retailer Boohoo who doubled sales to £228.2m in the four months to 31 December. And Next also had a good Christmas period which was credited to its more mature online operation. What is it that makes some retailers outperform others? The answer is often in their use of technology.

The Impact of Online

“Over the year the proportion of internet spending is continuing to rise, with almost one in every five pounds spent online by the end of 2017.” Rhian Murphy, Senior Statistician, Office for National Statistics.

As online shopping increasingly accounts for a greater proportion of consumer spending, there are a few operational considerations you need to make. High street foot fall will be:

  1. higher during November and December than the rest of the year
  2. lower during this period than in previous years due to the increase in online sales

Which means stock needs to be distributed differently with a greater reliance on central warehousing enabling you to operate a just-in-time model.

Shopping online

However, predicting how much stock and human resource you’ll need – and where – is not as simple as deducting online from high street sales. As John Lewis’ MD Paula Nickolds states, omnichannel retail means “people browse online, buy on tablet and pick-up in store.”

This makes it more difficult to calculate stock levels, supply chain requirements and the supporting people power. Factor in one-off events in the lead-up to Christmas like Black Friday and Cyber Monday and you’ve got a difficult calculation to perform.

To succeed in this increasingly complex landscape, retailers need real-time data and reporting that connects online with high street stores. The only way to achieve this is to employ cutting-edge software that monitors sales both online and offline and accurately predicts stock requirements across multiple sites.

Fail to adopt effective technology quickly enough and you could be in trouble. As M&S were in 2017: thanks to an underperforming distribution centre online purchases were delivered late.

In comparison, John Lewis shone during the same period with 3.1% more sales than in previous years. The reason? Investment in ecommerce operations and extending deadlines for services like next-day delivery and click-and-collect.

So what can you do to prepare?

Take Heed of Easter Learnings

Look back to the last major nationwide retail event and you’ll be staring Easter in the face.

Easter eggs

Asking the right questions of your firm’s performance can identify areas for improvement that can be implemented in time for Christmas:

  • did particular brands perform better than others?
  • did specific product groups perform well or drop off?
  • what was product availability like?

Don’t just rely on Easter’s data. If you have information available from previous Christmas periods, analyse this too. We believe this is best done centrally rather than allowing different stores to assess and predict stock requirements themselves.

By combining data on your entire operation and assessing it using leading data analytics tools, you’ll gain greater insight that will help you take corrective action.

With the right software in place, you’ll build a powerful mountain of data. And with in-built artificial intelligence and machine learning, your systems will gain a greater understanding of what consumers want, where and when. Which will help you predict supply chain demands with increasing accuracy.

Next-Level Warehousing, Supply Chain and Workforce Management

With a significant increase in the amount of Christmas sales, warehousing, supply chain and employees are stretched to full capacity.

Ideally you’ll be supplying stores against forecast on a just-in-time basis. However, Christmas increases overall demand so significantly you need to take more into account than store predictions.

Particularly in high-volume businesses, retailers need to blend data that considers whether there are sufficient:

  • staffing levels in warehouses and on the shop floor to shift, stock and sell the goods
  • warehouse space not just for the Christmas period but for peak days like Saturdays
  • transportation capacity to match the delivery plan

 

Modern Warehouse

Ordering in the right amounts to a central warehouse and drip-feeding deliveries to where products are required will make best use of your stock. With the right systems, replenishment orders can be automated based on accurate real-time reporting.

 

Supermarket retailer Morrisons will testify to the power of software. They credit their strong in-store Christmas performance to their new automated ordering system. By improving availability and reducing gaps in its offering by 30%, the retailer was up 2.8% in comparison to Sainsbury’s 2.3% and Tesco’s 1.9%.

Post-Christmas Analysis

Invest in software that’s always learning and you won’t need to assess your festive performance as the system does it for you. Using machine learning and artificial intelligence it will establish a range of improvements including:

  • where forecast accuracy could be improved
  • where product availability was lacking
  • issues with excess stock
  • problems with workforce availability
  • whether ad-hoc discounting was applied that could be avoided in future

The longer you have the software in place, the more data it can gather and the better its predictive capabilities. Giving you the upper hand over competitors who rely on less advanced approaches.

Christmas is a time of enormous pressure for retailers. Implementing next generation software and systems will enable you to provide a joined-up response across every element of your business. Making you better informed, better equipped and ready to deliver a strong Christmas performance with confidence.