Holiday Inventory: Intuition just isn’t enough anymore
When it comes to holiday inventory, most retailers use their intuition and industry knowledge to make their sales projections, plan their promotional calendar, and schedule product reorders. This was fine when the season’s promotions were merely percentages off and customers purchased products in stores. But as the retail world becomes more complex, so too must retailers’ holiday plans. With an estimated 40% of retailers’ yearly profits on the line, intuition this holiday season just isn’t enough.
JC Penney learned this first-hand in 2014. The drive to turn the company ‘cool’ again led to poor management of product reorders. After a successful Black Friday, the company was left without stock for many of the season’s best-selling products on which their customers had come to rely, basics such as boots and home goods. Having ignored historical sales data and purchasing trends, JC Penney’s inventory stock was instead items that had been identified as ‘cool’ or ‘on-trend’. The company not only had massive amounts of lost sales, but it also had unhappy customers who had come to JC Penney for those basics and had been told they were out of stock.
While this inventory mishap was under the leadership of former CEO Ron Johnson, JC Penney’s new CEO, Marvin Ellison, has since stepped in and is investing in the “science of retail” and believes firmly in stronger backend systems for the company. “We have tons of customer data, we just don’t do anything with it,” stated Ellison.
Ellison is not the only one to adopt this tech-data mentality. Walmart has also invested heavily in inventory management systems and technology solutions. To be successful in today’s tech-driven, complex retail environment, other retailers would be wise to follow suit. Retailers with a tech-data mentality will benefit from both the streamlined and automated workflows the actual technology provides as well as the incredibly valuable data that can be collected, analyzed and used to help with sales projections, promotions and inventory management.
Inventory and customer behavior data are two of the most impactful pieces of information for retailers. Prior to every season—and the holiday season in particular—retailers must reconcile their inventory from every channel through which they sell their merchandise. And this is becoming more and more challenging as the ways in which buying, distributing, and returning products grow. Such growth in complexity simply underscores the importance of retailers’ ability to have real-time inventory tracking and a full understanding of their products to maintain proper inventory management.
While this inventory data alone is critical to retailers, coupling it with customer behavior data can lead to bottom-line-altering results. By using historical trend data, tracking real-time top selling items and loss-leaders, and identifying purchasing frequencies, optimal price-points, and key locations, retailers can put together a solid profile of what their customers expect, look for and will buy, both during the holiday season and all year long.
And this information is gold. Retailers can use this information as the backbone to their holiday planning, knowing what to stock in what quantity and at what price. They can also use this information to help plan markdowns and identify product considered unsellable and direct that through off-price channels pre-holiday.
Retailers today benefit from a complex and tech-driven environment that allows them to engage with customers and sell product through multiple channels. This new-found complexity has also raised the bar when it comes to sales projections, promotional strategies and inventory management, especially around the holidays. To be successful, retailers can no longer rely solely on intuition; they must use carefully collected and mined data to get it right.
Ronen Lazar is co-founder and CEO of Inturn, which enable brands to efficiently sell excess inventory to retailers in private, online showrooms and provide improved decision-making to turn inventory faster, improve cash flow, and optimize returns.
Report: Amazon’s price advantage narrows in key holiday category
Watch out Amazon, Walmart may be giving you a run for the money in the holiday toy aisles.
Walmart is making big strides to challenge Amazon’s dominance in pricing, promotion and assortment of toys and games this holiday season. That’s according to Boomerang Commerce’s annual “Boomerang Insights: Toy Category report,” which found that Walmart has more than doubled its online product assortment between the first and third quarters of 2016 and is leveraging its recent Jet.com acquisition for competitive pricing.
Toys “R” Us is also pursuing a strategy of increased assortment, as well as offering exclusive product lines. Meanwhile, Target is eschewing assortment expansion in favor of special pricing promotions, according to the report.
Other key findings of the report include:
• Amazon is still, by far, the leading retailer for toys and games with over 5 million items in the category — compared with less than 100,000 for other retailers — and with a pricing strategy that optimizes based on external market and internal data signals.
• Jet.com has the lowest prices, meeting or beating the usual leader Amazon by an average of 64% — up from 55% in 2015 — on its overlap of most popular items.
Walmart is a close second to Jet by pricing 55% of popular items the same or lower than Amazon, but this represents a 9% point decrease year-over-year.
Meanwhile, Target increased its price competitiveness with Amazon by 8 percentage points year-over-year to meet or beat Amazon’s price on 42% of popular overlapping toys and games.
• Walmart and Jet offer the most aggressive price discounts. Compared to list prices on Amazon, Walmart discounted 54% of popular items, followed by Jet with 47%, and Target with 41%. Concurrently, Target is seeking to win customers through promotions, such as 20% discounts for select toys, “buy two, get one free” games and its current “10 Days of Deals” campaign.
• Walmart is becoming increasingly more competitive in assortment with a 66% overlap with Amazon’s most popular items; this represents approximately 1.8 times the nearest competitor.
• After Walmart, Toys “R” Us has the highest assortment overlap (40% with a sampling of Amazon’s popular items, representing a 5 percent improvement over last year.
• Although toys and games specialty retailers struggle to compete on price, their wide assortments within specific sub-categories like video games at GameStop and exclusive LEGO products at Toys “R” Us keep them relevant.
Bed Bath & Beyond looks to boost personalization category with new acquisition
Bed Bath & Beyond hopes its newest acquisition will help it “get personal” with its shoppers.
The home goods retailer has acquired PersonalizationMall.com, a pure play retailer that creates customized merchandise and gifts, for approximately $190 million in cash. Bed Bath & Beyond expects the purchase to expand the breadth of its growing product personalization category, and expand its portfolio of differentiated merchandise that commemorates milestone events and special occasions, such as weddings, birthdays, holidays and the welcoming of a child.
“We view personalization as a significant opportunity for us to create additional differentiation, and enable us to do more for and with our customer,” said Steven Temares, CEO, Bed Bath & Beyond. “We look forward to supporting PersonalizationMall.com as they continue to improve the customer experience by enhancing their product mix, upgrading their e-commerce website and driving optimization of their marketing initiatives.”
Bed Bath & Beyond said the acquisition will not have a material effect on its fiscal 2016 third quarter ending on Nov. 26, 2016. The chain will report third quarter results on Dec. 21.