Retail industry strategist, Jane Fazzarali examines what strategies are available for retailers to maximise Christmas 2010 sales

Retail industry strategist, Jane Fazzarali examines what strategies are available for retailers to maximise Christmas 2010 sales

All over the globe, retailers are wondering what Christmas 2010 will bring, said Jane Fazzarali, retail industry strategy vice president of supply chain software and services provider, JDA Software.

Will consumers be ready to shop after two years of economic turmoil, she asked? And, with Kelkoo predicting internet retail sales are set to rise by 29%, will retailers be ready for whichever product becomes the ‘surprise best seller’?

She continued: “Retail analysts are more optimistic this year with the UK expected to enjoy the third highest rate of overall retail growth in Europe this Christmas at 1.3%. Kelkoo found that while offline sales are expected to fall by 2.9%, online sales are expected to more than compensate for this, with a predicted rise of 29% since last year.

“Research by the price comparison website also highlights that roughly 25% of a retailer’s sales occur during the Christmas period. Traditional methods of predicting sales, including an examination of historical data and previous years’ performance, are not always reliable. There’s no doubt that retailers will do their best to stock the shelves and plan staffing levels for the upcoming Christmas rush, but the margin for error is razor thin.”

However, Fazzarali said there are some tried and tested ways to achieve the retail holy grail of increased instore and online sales with low inventory levels:

Merchandising: know the consumer

Give them what they want with localised assortments. “With the ability to research and purchase a huge selection of products via the internet, consumers have access to more information than ever – but so do retailers,” she said. “Using that information to provide each store with an assortment that is unique to their local consumers’ needs this Christmas.

“But that is just one piece of the puzzle – today’s retailers need to adopt category management processes to ensure that premium floor and shelf space is allocated for the ideal product mix. This gives retailers the ability to evaluate product sales across varying markets to determine which price points and brands resonate with consumers.

“Consider automation to respond faster,” she advised. “The adoption of category management strategies to reset store shelves or floor plans is not as costly or labour-intensive as it once was. Today’s automated technology allows retailers to produce shelf plans or planograms in a matter of seconds, significantly reducing labour costs and providing the opportunity to increase revenue and profitability, as well as avoid the out-of-stock situations.”

Supply chain: one view of demand

Accurately plan inventory levels. “Retailers are under constant pressure to consolidate and leverage demand data, which can then be used to optimise the allocation of products between channels,” continued Fazzarali. “Today’s retail supply chain solutions offer a holistic view into demand across multiple sales channels, providing seamless communication and enabling more efficient demand planning.

“In an ideal world, retailers would be able to respond to replenishment cycles and shifts in consumer demand in real-time. The key to achieving this is integrating merchandising, assortment planning, pricing, space management and sourcing initiatives. This lets retailers respond faster to changes in consumer demand and more effectively manage a complex supply chain.

“Deploy dynamic sourcing,” she added. “Dynamic sourcing strategies can help retailers that want to maximise profits during the Christmas period. The dynamic sourcing strategy currently used by a large automotive parts retailer offers a blueprint for retailers catering to holiday shoppers. In every region that retailer serves, one store stocks upwards of 200,000 SKUs [stock-keeping units], while other stores in the area carry about 60,000 SKUs. If a customer needs a part that is not available at one of the smaller stores, the larger store can ship it directly to the customer with next-day delivery. It’s this kind of sourcing strategy that ensures any lost sales are avoided and shoppers remain satisfied.”

Store operations: up the service-level ante

Make workforce management more strategic. “In order to compete effectively during the Christmas season, retailers should try to strike a balance between reducing store operations budgets and the growing demand for a consumer-centric shopping experience.

“Modern workforce management must factor in all of the traditional staffing constraints, plus fixed and variable daily tasks and store sales volume – all of which ensure an accurate forecast of staffing requirements. Automation of staff scheduling allows store managers to focus on driving sales and improving the customer experience. Workforce management solutions based on forecasted demand can help drive sales results, enabling retailers to accurately forecast staffing levels based on expected sales, associate skill sets and traffic patterns in the store.

“As Christmas approaches, retailers that adopt proven merchandising, supply chain and store operations strategies will be poised to increase sales and capture market share – even if consumer spending is moderate.”

Fazzarali concluded: “Synchronising consumer-driven plans with workforce management and point-of-service strategies will give retailers the tools needed to build market share and solidify consumer loyalty – benefits that will extend far beyond Christmas 2010.”