Ed Betts, General Manager - Retail Lead Europe at Retail Express, considers the importance of a central planning platform and AI-driven forecasting to ensure seasonal event success.
The retail calendar year is a busy one. The industry plays a pivotal role in making fixed seasonal events special, in setting the tone, creating the ambience and making every occasion memorable. Whether Christmas, Hanukkah, Diwali, Passover, Easter, Holi or Eid al-Adha, or one-offs such as sporting events or the King’s Coronation, there is an expectation that stores will be stocked with an abundance of event-related products and branded merchandising to create the desired fanfare.
Yet, for retail businesses, planning and executing such events is far from straight-forward. To differentiate themselves from the market and become the go-to destination for customers they must pull out all the stops with innovative approaches that are not just about price, but about the wider customer offer. Stock availability must be carefully managed to meet perceived demand and orders placed with multiple suppliers months in advance; while also simultaneously coordinating appropriate marketing activities to ensure significant interest and sell-through of an event’s related categories with minimal inventory left over to optimise profits. This is a difficult balancing act, with financial targets on a knife edge.
The challenge of events planning
All too often, such planning is based on assumption and guesswork, making forecasting with any degree of accuracy incredibly problematic. While figures about the previous year’s performance might be available to some degree – and can’t always be relied on due to nuances that may have affected demand at the time - the use of legacy systems and the manual sharing of documents which is time consuming, cumbersome and unreliable, only serve to compound the problem. A retailer that is essentially blindfolded has little hope of being the first to market with new event-themed products without a system that will help them do so. Better, clearer data-driven planning is desperately needed to ensure cleaner seasonal-event entry and exit.
For retail businesses to be successful at event execution they need a system that facilitates far closer collaboration with internal teams as well as external stakeholders to ensure that goods are delivered and promoted effectively; a system that allows greater visibility of historic and current sales data to increase their agility and be able to react quickly in real time to changes in customer purchasing habits. Such a system would enable greater tiller management of what is happening on the shop floor using data from customer baskets and trolleys and would remove the reliance on stifling legacy methods of operation that often involve a confusing mix of emails, phone calls and spreadsheets.
The digital transformation of retail is creating a growing appetite for 'algorithmic retailing’ – or the use of artificial intelligence (AI) to create more intelligent merchandising practices, to drive automation and secure competitive advantage. Such solutions improve pricing, promotional planning and execution, media planning and collaboration with suppliers as a way to unlock improved vendor funding and enhance execution. Indeed, innovation can be driven by retailers or suppliers, so having a system in place that facilitates the sharing of relevant information allows constant communication and collaborative working. This enables obstacles to be overcome through a coordinated data-driven approach. Algorithmic retailing also frees up executive and staff time - critical in a situation where internal practices have become a direct hindrance to growth and market responsiveness.
Retailers can now make use of new levels of visibility and insight previously out of reach. For example, by using AI to analyse current and historic data about particular event items with the trading and merchandising conditions that underpinned the sales of those items, retail businesses can make accurate predictions about how pricing and promotional plans will impact future revenue and profits at both summary and granular levels, and what to do if an item over or under performs. Previously, this intelligence could only be gained from implementing a plan and waiting to see its effect - essentially a process of trial and error. Now, the ability to gain such knowledge in advance is truly game-changing.
Intelligent merchandising presents one version of the truth which is accessible to all stakeholders and can be utilised to plan and agree on tactics for event management. Operations, sales and marketing teams, as well as suppliers, all need to be informed if plans change. Crucially, this system makes this process transparent, with all stakeholders able to see and react to alterations and amendments in real time. Critically, virtually calculating profit and loss (P&L) becomes easier due to the ability to consider past, present and future activity. The system enables retail businesses to go to market with a plan that has gained full stakeholder agreement before it goes live.
Better events marketing
Intelligent merchandising enables retailers to build up their plans for each event, including the creation of marketing collateral and determining appropriate promotional tactics. The system can be used to calculate the most optimal products based on customer basket analysis data, and therefore which products might perform best on a promotional flyer, or are more likely to generate the greatest buzz when featured prominently in a store catalogue.
As all plans are generated within the system, this is the last point of record before all of the information is sent to downstream activation points, e.g. the price of goods for stores, or the media asset layout to the design agency. The plan made and strategy agreed upon is what will be activated at the retailer, and both retailers and suppliers can therefore be confident that they are delivering on what they negotiated.
Using the insight that this solution provides, retail managers can be confident, as each event arrives, that their teams and wider stakeholders have considered every element associated with its planning. Having a properly researched strategy in place, and a far better understanding of product performance and customer demand based on data, will lead to a much more successful and profitable series of seasonal events for the modern retail business.
To learn more visit: www.retailexpress.com/solutions/end-to-end-merchandising