Christmas might be nine months away and consumers will be looking forward to long summer days before they think of cold winter nights. But for retailers, Christmas must come early as they prepare for the peak season. While the sun shines, behind the scenes they should thinking about tinsel and trees.
The Centre for Retail Research shows the average UK household spent almost £800 on Christmas in 2015. To ensure they are able to take best advantage of the festive season, retailers should already be planning for the next Christmas period. We recommend a three-stage approach: retailers should review their previous Christmas, before developing an improved strategy for the coming season and then put this into practice with an efficient and smooth running stock flow.
Last Christmas: review and assess success
The first step for retailers preparing for Christmas 2016 is to honestly review the successes and failures of Christmas 2015. Ideally, this should take place as soon as the festive season ends – preferably in January.
In order to improve, you must first establish the failings. Perhaps last Christmas you found that your bestselling garment was often out of stock or that unprecedented demand impacted on customer service. Identifying the key areas for improvement will allow you to work to avoid the repetition of these mistakes for Christmas 2016. It can also be useful to compare your success with that of your competitors, identifying their areas of weakness and where they thrived, and reflecting any learnings in your own strategy.
Looking ahead: data and trends for Black Friday 2016
Once a retailer has reviewed their previous Christmas strategy, it is time to forecast. This should not only be about working out which products will be most popular with consumers but about understanding the peak buying occasions: what consumers want to buy, when they want to shop and how they want to buy it.
The “how”, is increasingly as important as the “what” and the “when”. In her 2014 report for DHL Supply Chain, Fashion in Flux, Lisa Harrington, director of supply chain consultancy The L Harrington Group, stated: “For consumers, omni-channel shopping is just shopping,” demonstrating that a seamless and consistent experience across a variety of retail channels is more vital than ever.
Considering changing trends and behaviours is another important aspect of this process. Black Friday 2014 saw high streets heaving but a year later bricks-and-mortar stores were much quieter, while online sales surged and many websites buckled under the pressure. So an understanding of last year’s data is important, but should not be relied upon.
We encourage retailers to monitor data throughout the year to predict trends for Christmas 2016. Consider what garments are popular in the run-up to November, or what times of day consumers are shopping online, or in store.
Smooth stock flows: an efficient operation
Once a retailer has developed its plan, it is time for implementation. Stock flow is a core part of retailers’ operations – it makes sure products are in the right place at the right time. During the Christmas peak, this is crucial.
We recommend that retailers use a central stockpot to mitigate against shortages and ensure availability for consumers where possible.
Accuracy during peak times is also key. For example, wrongly labelled garments can cause disruption in the supply chain and interfere with the efficient running of operations on the shop floor. This is increasingly an issue when the store is busier than usual on, for example, a peak such as Black Friday.
To support with this, we’ve introduced ongoing cycle counting to many of our operations. This means that the team conduct a partial physical count of stock every day – once a cycle is completed, the process starts again. Coupled with daily accuracy checks on both inbound and outbound product, this improves accuracy and does not interrupt operations, whereas a full physical inventory count can often draw employees away from their primary duties.
During a peak-buying season, efficiency and accuracies such as this help prevent mistakes and ensure that employees’ time is being used most effectively.
If Christmas is not already on retailers’ minds, I urge them to start preparing now for the festive months to come. We may have nine months until Christmas but if you’re not already doing it, it’s time to ensure you have a detailed strategy to work with your network of partners to implement in good time.
John Boulter is managing director of retail at DHL Supply Chain