With Christmas fast approaching it has proved to be a natural point at which to launch our first research report looking at Seasonal Commerce and examine the impact that seasonal peaks have on retailers large and small. Liz Morrell, reveals the results.
Unsurprisingly, it was Christmas that topped the list of seasonal peaks within our report survey with almost three quarters of retailers (73%) citing it as the peak that had the greatest impact on their business. This was followed by 16% of respondents who said that Easter was the trading period that impacted their business most.
The second most important peak for retailers was back to school for nearly a third (32%), 23% who cited Easter and 20% who said Mother’s Day. Ranking third most important was Father’s Day for a quarter of respondents, Mother’s Day for 24%, Back to School for 22% and Easter for 21%.
Every day is an opportunity somewhere in the world or with some slice of the market
Retailers also reported that peaks are changing with more activity during what would have traditionally been downtime for retailers. This comes as mobile transforms seasonal commerce to a 24/7 activity that even now includes Christmas Day – sometimes even before the presents have been opened!
Whilst seasonal peaks are one thing, we also wanted to understand how the seasons themselves were changing for retailers. Although just under half of retailers (49%) were still operating on a six-month season cycle, for 32% of respondents to the survey a three-month cycle was the norm whilst almost one in five (19%) was operating on a four-week season cycle.
For more than a third (37%) of retailers this was a shortening of the season cycle as retailers learn to be more responsive to customer demand and trend changes and work harder to stimulate customer interest and sales by turning product over at a faster rate.
This does depend on being able to predict what the customer may do and the survey showed that predicting customer behaviour remains just as tough. Just under half (49%) said it had grown more unpredictable. This was explained by respondents as being largely because of the challenge of 24/7 commerce and the expectations that surround that.
The challenges of seasonality span all retail functions – from buying and merchandising, operations and logistics to in-store management and staffing. Our survey showed that the biggest problem that retailers faced was in stock availability. Nearly a third (31%) said that seasonal peaks had the greatest impact on having product to sell. This was followed by the ability to deliver to customers on time – presumably largely for the Christmas rush – where 29% of respondents said seasonal peaks had the greatest impact on delivery to customers.
For just over one in four retailers (26%) the biggest impact was on promotions. Move one level down the scale however and stock availability, getting volume predictions right, product mix, delivery and competition were each cited by an average of 1 in 5 (around 20% each time) as being the areas of the business second most affected by seasonal peaks.INTERNATIONAL OPPORTUNITIES
Managing the peaks at home is hard enough but the internationalisation of retail for pretty much any retail business means that there are potentially international seasonal peaks to embrace or at least consider if a retailer wants to stay ahead. This was summed up most succinctly by one of the survey respondents who said “Every day is an opportunity somewhere in the world or with some slice of the market.”
Just over a quarter (28%) of respondents said that they considered international peaks in their forecasting. However this left 72% who said they weren’t despite the fact that earlier this year Forrester Research cited the need to plan for key online shopping dates everywhere in the world as one of its Top Five Global eCommerce Predictions for 2014.
Yet simple gains can be made simply by recognising that internationally retailers can have the same peaks as the UK but at different times of the year. A great example is Mother’s Day which is actually celebrated on more than 20 different dates throughout the year offering great potential for a retailer that can target the audience of such a seasonal peak effectively enough internationally.
As well as calendar peaks surrounding tradition there are also increasingly important trading peaks too such as back to school and newer peaks such as Chinese Singles Day. Even imported and “created” peaks such as Black Friday are also becoming ever more relevant to the UK retailer and consumer. Who can forget the scuffles that broke out at Asda last year for instance when the company ran its first ever UK Black Friday event with some customers literally fighting for the offers available.
Yet, despite all these opportunities, not all retailers have the resources to manage and understand seasonal trends to enable them to react. More than half (59%) said that they failed on this point.
To better understand trends and exploit seasonal opportunities data and analytics is key but it’s a tool many retailers fail to embrace. “A lot of businesses try to second guess what customers want instead of looking at the data,” says Warren Cowan, founder and CEO of OneHydra and one of the sponsors of the Seasonal Commerce research report. “They can make a lot of presumptions from very limited qualitative data but if you look at the data you see what’s happening. The more access to data and the better the insight they can get from that data the better they will get at trading at peak or not,” he says.
But it’s a hard task. “Clearly with the advent of all the different channels and technology growth it is getting a lot more complicated for retailers and they are simply drowning in data,” says Norman Mackintosh, industry consultant for retail at Teradata, the second sponsor of our report.
In our survey, nearly half (47%) said that their use of data and analytics did the job but at a basic level only. Almost one third (30%) said that they needed to improve on their use of data and analytics just to be average and almost 5% said that their use of data and analytics was “very much lacking”.
The survey showed that only one in five (19%) thought their use of data was sophisticated within their business. This suggests that there is huge opportunity for improvement.
We went on in our survey to try to understand how comprehensive retailers felt their forecasting was. 42% of retailers said their approach to forecasting wasn’t comprehensive enough thanks largely to the investment of time, money and resources required as well as the integration of systems needed to extract the best out of data.
Finally, the report looked at what analytical activities retailers were doing to support their demand forecasting activities. More than three quarters (76%) of respondents were using multi-year data to identify changes in seasonal impacts. More than half were incorporating the impact of their promotions in their demand forecasting too, enabling them to better understand how their offers were driving sales and continuing to demand peaks. Almost half (48%) were forecasting at SKU level whilst nearly a third (29%) were forecasting at both a store and SKU level. Just over one in four (26%) were using their data to help them localise assortments.
The more advanced were doing more too. One in five (19%) were using sophisticated algorithm-based techniques to develop more accurate forecasts. Meanwhile one in four (26%) were making use of social signals in order to help them enhance their forecasting ability.
Retailers were also making use of SEO opportunities. Nearly two thirds (65%) were reprioritising their sites to ensure that keywords for the period are maximising this but that still left more than a third (35%) who weren’t. This is missing out on huge potential especially as we followed it up to ask if retailers optimised search engine opportunities with 28% of respondents saying no at a time when customers are being more specific in their searches than ever. Failing to embrace all seasonal opportunities is most definitely a black mark on the calendar.