Today’s retailers are facing an urgent need to better understand customer behaviors. This holiday season, listening to what consumers want and need will be vital to predicting their purchasing decisions and ensuring your inventory is not under- or overstocked.
However, many supply chain leaders are still relying on their instincts rather than the newest data. Most retailers have technology in place to capture supply chain data, but they don’t use it to gain a holistic perspective on their end-to-end operations in order to make better decisions. This is the true power of supply chain technology: It empowers businesses to sense demand change on a real-time basis to eliminate unnecessary early production, prevent overordering, and reduce waste in production.
Why Do Retailers Need to Leverage Existing Data for Insights?
Companies are aware of the power of data. According to a study of 350 retailers, 76 percent believe that shopper insights are crucial to their business. And yet, a large proportion of these “believers” judge themselves to be data rookies, still at the figuring-things-out stage.
Moving beyond this stage will be important for retailers wanting to gain back some of what they may lose this holiday season. As global concerns proliferate, inflation rates soar, supply shortages worsen, and consumer worries grow, winning strategies are far from clear-cut. Already, 29 percent of consumers are expecting to spend less than they usually would during the holidays.
Leveraging customer data in real time will provide a window into their shifting world. Map their experience across omnichannel touchpoints, forecast variations in seasonal and short lifecycle products, and align products into a strategic mix that will enhance customer motivation across product lines. Doing so will immediately help meet business demands, which are understandably exploding right now.
Simply relying on instincts could lead retailers astray. By focusing on past experience and guesswork, they might miss out on the current trends borne out of developing events, including how certain demographics are using e-commerce, how different people are spending and saving, and the pain points that spur consumers to act.
How to Use Current Data to Understand Supply and Demand Over the Holidays
If brands can better understand customer behaviors and predict how they’ll be affected by price, they’ll be able to navigate the next several months successfully. Considering that the fourth quarter accounts for significantly more sales in many industries — 34.9 percent of annual sales in the hobby, toy, and game vertical, for example — it’s worth getting supply and demand correct now. Here are a few good places to start:
1. Streamline your offer and logistics.
Consumers aren’t splashing the cash this holiday season — we can already see that trend emerging — but you don’t want to present them with empty shelves. By judging which products are most needed and wanted right now, you’ll be able to expedite and cut orders to optimize your logistics expense. Responding to fluctuating margins by streamlining product mix at the right customer service levels will also free up cash flow so you can focus on the areas you need.
2. Use existing data to get near- and short-term visibility into SKU movement.
Gut instinct or manual forecasting can lead to inaccurate, unhelpful stock levels. This past summer, brands faced insecure supply chains and mass uncertainty, leading to a surplus of certain products that they then had to slash prices on in order to remain competitive. Leveraging customer data like local, real-time demand changes can help you act appropriately on a daily basis.
3. Use targeted promotions and pricing strategies.
By examining your current data, you can zero in on where your target audiences are hanging out and how price-sensitive they are. With current events as they are, more audience members will be price sensitive than in previous seasons, but they may be reserving their spending for certain kinds of product. Get a good sense of this data, and you’ll be able to align pricing and promotion strategies into a perfect storm.
If retailers can prioritize existing data as they practice supply chain planning, they can use real-time insights and take action on existing data sets. In a chaotic holiday season being proactive to customers’ needs will make all the difference as we attempt to make smart decisions.
Anita Raj is the vice president of product marketing at ThroughPut Inc., responsible for the vision, strategy and execution of go-to-market and product marketing initiatives, including value proposition, product launches, customer marketing, and product lifecycle marketing.
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