Christmas 2014 will likely be a lucky dip for many retailers

Christmas 2014 will likely be a lucky dip for many retailers

The failure of most retailers to embrace customer data analytics to measure the impact of different factors on Christmas demand means the festive season this year will be a lucky dip for many.

A good number of retailers are taking positive steps to embrace customer data analytics, a report by retail analysts SAS and Conlumino has found. More than half (55%) constantly measure the impact of promotions on individual products, while 38% say their company often changes promotional strategies based on competitor activity.

The 'Christmas 2014 Adapting to Evolving Consumer Shopping Habits' report revealed, however, that the bulk of retailers are not using the year-round flow of available data to understand shoppers' Christmas wishes and hone their forecasting.

Around 46.9% of retailers still use manual calculations to measure the impact of different factors on Christmas demand, while 44% use ‘‘gut feel" to forecast demand for new products. And, despite two thirds of consumers saying that year-round offers lessen the appeal of seasonal promotions, only 23% of retailers plan to reduce their investment in promotions this Christmas. Plus, just 14% of retailers use data from other companies - such as the weather - to help forecast demand accurately.

"Manual processes are slow and prone to human error, and can only draw on insight from a limited number of data sources," said Andrew Fowkes, head of Retail Centre of Excellence, SAS UK & Ireland.

"This means forecasts cannot be quickly adapted to include new information as the season progresses - with obvious implications for supply chain management, pricing and promotions, fulfilment and customer satisfaction. So, it's little surprise that 44% of retailers say their company would benefit from being able to automatically combine and analyse different data sources to measure demand in the run up to Christmas."

The report noted that consumers are still feeling the pinch, with early indications suggesting this Christmas is likely to have a similar feel to the promotion heavy 2013.

"M-commerce is likely to continue its rapid growth story this Christmas and, with consumers increasingly shopping wherever and whenever they want, retailers are likely to face their toughest challenge yet when it comes to forecasting Christmas demand."

The authors noted that with more and more consumers exploiting the opportunities presented to them by multichannel retailers, expectations of fulfilment are rising.

The report offered some trading tips for retailers heading into the festive period, starting with contingency planning incase of events such as adverse weather conditions. This includes working closely with suppliers to ensure they are on the same wavelength and ready to respond quickly and in a coordinated fashion when problems arise.

Keeping consumers in the loop on delays or cancellations to orders is essential, as is having a transparent delivery and returns process, the report noted.

Incorporating weather into forecasting is also key, as is having a clear view of the supply chain in order to ensure retailers have the ability to react quickly to unforeseen changes in demand.

"If retailers are fully aware of where their stock is at all times and have an open line of communication with suppliers and logistics operators, then stock can more easily be rerouted to locations experiencing peak demand," report authors noted.

The report also highlighted more targeted promotions as key, and pointed to targeted mobile advertising as a valuable tool to differentiate from competitors.

Social media as a forecasting tool was also highlighted as a way of presenting retailers with a wealth of information on consumer trends.

"Consumers live in a society now driven by immediacy, and retailers have no option but to get in sync. So whether it is the known unknowns, or the unknown unknowns, big data analytics provides retailers with the ability to predict the possible and meet consumer demand," said Fowkes.