Analytics to the Assortment Rescue: 5 Smart Strategies to Delight Holiday Shoppers

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Analytics to the Assortment Rescue: 5 Smart Strategies to Delight Holiday Shoppers

The holidays will soon be upon us. It's a stressful time for many — especially for retailers that want to make good on the busiest shopping season of the year, which necessitates getting a lot of things right.

The enormity of the task can seem overwhelming — figuring out what customers want, when they want it, and making it available via the channel they want, at the exact moment they want it — all the while avoiding inventory stockouts and overstocks. What's more, other unforeseen factors such as weather and economic conditions and ever-changing consumer fads and trends further complicate demand forecasting and inventory allocation.

And since holiday merchandise is often procured 9 to 12 months in advance, the majority of the assortments that will ultimately be delivered for the holiday shopping season are already planned, produced and, in some cases, on their way to the warehouse for downstream allocations. Unfortunately, you rarely can reorder goods at this point or change your print marketing. And while retailers with physical and online stores have the option to move products between stores or online — a la omnichannel retailing — this is no panacea for planning and allocation mistakes, and they can be incredibly costly.

So what's a retailer to do? First off, it's imperative to take action now, as every day closer to Christmas means retailers lose flexibility to affect change. This is where advanced analytics shines. The ability to quickly identify trends, opportunities and instances where actual buying is diverging from plan makes a major difference. Analytics delivers critical insights to help retailers revamp their retail strategies to make the most of the holiday shopping season.

Here are some analytics-driven strategies that retailers can employ to meet holiday shopper expectations, optimize sell-through and margins:
  • Hone your focus: Savvy retailers know they don't need to cater to every customer — only those that really matter. Customers that matter provide the highest value — they shop often and at full price as opposed to the customer that rarely shops and only buys merchandise on clearance. Advanced analytics shows which customer segment is buying each product category and how often these shoppers are responding to promotions. Lock and load marketing efforts on these customer segments as they represent your greatest sales opportunity and are the customers you should work hardest to keep engaged.
  • Improve responsiveness through smarter distribution: Advanced analytics — including exceptions such as those generated from "Retail Exception Engines" (stockouts, imminent stock outs and overstocks) — can help retailers' allocations teams figure out which locations need more, less or different product as they are pushing items out of the distribution center. These metrics can be applied to both brick-and-mortar as well as e-commerce outlets.
  • Delve into detail: Advanced analytics can provide tremendous benefit in enabling the understanding of real versus actual sales opportunities and liabilities on a highly granular level. For example, historically a retailer may have high sell-through rates on product. But maybe sales peak only in November, or only in certain stores.

    Because sales figures are often averaged across the store fleet and/or channels, without more granular detail, retailers can often miss incredible opportunities to move inventory and meet customer expectations. Advanced analytics can help retailers unearth these opportunities to properly assort each store to meet the specific needs of their unique customer base.
  • Get smart in-store: The deployment of in-store analytics bucks a decade-long trend in reducing the amount of information passed along to stores. By making information available to store managers, they are now empowered to understand the efficacy of their sales efforts and what's selling in their store versus other stores, how their store is different than other stores in the fleet, etc. Leveraging this real-time insight, store managers can execute different promotions or different merchandising schemes to proactively take the necessary steps to improve store sell-through and customer engagement.
  • Get a jump on next year: Start planning for the 2017/2018 holiday shopping season as soon as this one is put to bed. Performance is only as good as the prep/plan. Look for ways to put the customer in the center of the planning process; customer-centricity begins with buying. And to this end, the more you can leverage analytics, the fewer assumptions you'll be forced to make, and the more aligned you'll be with customer needs. 
To assort with confidence, in the lead up to next year's holiday shopping season, leverage e-commerce channels to test styles and colors and use these insights to expand brick-and-mortar assortments based on product uptake.

Retailers heading into the holiday shopping season must leverage every customer interaction and every inch of real estate; advanced analytics can help ensure they have the right "goods" to fulfill each and every customer's holiday wish.

Nick Leeper is director of product management at Aptos, Inc., overseeing the company's retail analytics solutions. He is a passionate advocate for one view of the enterprise and deeper insights for better decisions.

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