UKI Managing Director of Retail Express, Ed Betts, explains how AI-powered retail management can help retailers weather the busiest shopping period in a year of unprecedented challenges.
September 16 marks the 100-day countdown to Christmas, also known as the Golden Quarter; the busiest period of the retail calendar.
The Golden Quarter can be a tough time for retail businesses, but this year, of all years, will be a real challenge.
The cost of living crisis continues to disrupt supply chains, the effect on global trade and freight costs due to the rising dollar, as well as strikes affecting ports and transport links, will have all a significant impact on retailers ability to do business.
Retailers just have to get it right this winter. And with the Golden Quarter bringing Halloween, Guy Fawkes Night, Black Friday, Cyber Monday and Christmas in very quick succession, the main business challenge is how to generate truly incremental growth.
Retail businesses must be able to move in and out of various events in the quarter cleanly, maintaining the extremely difficult balance between ensuring timely inventory availability and avoiding excess inventory after each event.
With the pressure mounting to finalize plans and start generating results, it can be easy for shoppers to rely on the same promotions over and over for convenience. This can be precarious as results are likely to be at best the same as previous years or, due to the current financial climate, much worse.
For retail businesses to not only keep their heads above water, but also achieve a profitable final quarter at such a frenetic time, they must possess impeccable retail skills, be able to maintain excellent relationships with suppliers and other key stakeholders and employing an extremely sophisticated team. forecasting, ordering and replenishment system.
Category management is essential
If it’s not on the shelf, you can’t sell it. Retailers know all too well the importance of timely stock ordering when it is most needed. But it’s easy to see why, as the pressure mounts, mistakes can be made and key lines overlooked or miscalculated in the rush to turn a profit.
Retailers should also keep in mind that, for example in the week leading up to Christmas, the buying pattern changes as customers abandon regular grocery items and turn to ancillary items for the holiday season.
The ability to create accurate and detailed records is therefore essential, reflecting a range of product categories as well as offers, promotions and advertisements, all tied to related seasonal events.
Yet time and time again, the onerous effort of this task is such that retailers revert to a proven approach to reducing risk. This only hinders, rather than helps, the retailer’s cause. Retailers are then tempted to boost declining sales with quick deals, but this can lead to major problems without proper forecasting.
For example, “acrobatic” offers – using a sudden price drop or deep discount in an attempt to generate instant sales – can derail the business plan while creating wider problems when the promotion runs overhead. or below forecast.
This will impact the sales mix and lead to additional pressures. Changes to sales plans to meet performance at this point in the quarter should be managed carefully to avoid repercussions on pricing periods, inventory levels and any advertising already agreed.
Digital transformation: a new era of algorithmic distribution
This is where smart merchandising comes in, helping retailers coordinate their efforts and stay ahead in an increasingly competitive market by harnessing the capabilities of AI. Smart merchandising software replaces a chaotic mix of emails, phone calls and spreadsheets with powerful planning tools and AI-powered insights that can help retail businesses redesign their goals, while gaining some respite from being burdened with tedious administration.
Executing on the back of high-quality planning is key to retail success, improving partner and supplier relationships, and ensuring a unified approach.
Using smart merchandising software to simulate plans before they go to market can provide a more holistic view of planning and performance over the entire Golden Quarter period. Here, algorithmic retailing, the use of AI to drive automation and recommendation systems, can free up staff time while allowing them to stay in control.
Time spent improving retailer-vendor collaboration with better negotiation skills and better forecasting will help the retailer present a strong front in the face of cutthroat seasonal competition.
Maintaining a centralized planning platform provides one version of the truthreplacing siled approaches and conflicting practices with a single, transparent plan that everyone can take ownership of to become the definitive modus operandi.
Grow profits in the Golden Quarter and beyond
Retailers can now utilize new levels of visibility and information previously inaccessible. For example, by using AI to analyze current and historical data along with the business and merchandising conditions that underpin those sales, accurate predictions can be made about the impact of pricing and promotion plans on revenue and future benefits at summary and granular levels.
This has obvious merit both during the Golden Quarter and beyond. Previously, such intelligence could only be obtained by implementing a plan and waiting to see its effect. Yet at a time of year when the stakes are so high, the modern retailer can no longer afford to rely on such trial and error.
Forward-thinking retailers are moving quickly to take advantage of intelligent merchandising solutions, delivered on a software-as-a-service (SaaS) basis, that will enable them to break free from the limitations of legacy operations and adopt technology designed to facilitate growth.
With a renewed ability to improve prices; promotional planning and execution; media planning; and collaboration with suppliers, better supplier financing is accessible.
By embracing digital transformation and taking steps to dramatically improve key processes, a well-coordinated and more profitable Golden Quarter awaits us.
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About Edward Betts, UKI Managing Director, Retail Express
Ed has been in the retail industry for over 20 years and joined Retail Express in 2019 where he is Managing Director for UK & Ireland.
He has a deep and specialist knowledge of managing retail categories, pricing and shopping requirements, having worked with several UK retailers, including eight years at Asda where he developed and launched an online wine service autonomous.
He then worked for Distell, a major international drinks manufacturer, where he managed strategic accounts at several major UK grocers, including Morrisons, Asda and Marks & Spencer.
Ed is also Retail Express’ lead consultant, helping customers use products and services more effectively and providing advice on the effective use of pricing and category management.