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It’s the Data and Calendar, Not Your Gut This Holiday

BY CSA STAFF

By Shelley E. Kohan, [email protected]

In reviewing month-to­-month sales results, the saw tooth performance of 2012 has left many retailers wondering the fate of holiday this year. Early predictions for holiday comp sales results have hinted to low single digits.

But let’s face it. We hear the same predictions each year; they are a safe bet for analysts during a challenging global retail climate. And, planning based on month-to-month performance can be dizzying. So, on the eve of the 2012 Holiday season, let’s get our minds focused on near-term performance, and rely on more than instincts and isolated data points from 2011 to plan the next two months out.

Nearly 95% of sales in 2011 occurred in stores, according to the U.S. Department of Commerce. Many retailers face the challenge of staffing to demand during holiday season to minimizing staffing costs during an unpredictable environment. Additionally, some retailers use transactional or sales data, which are lagging factors, to plan staffing.

Critically important in today’s retail environment is understanding the missed opportunities of the 2011 holiday season, so we can focus on wins for this season. By looking at RetailNext’s 2011 Holiday Performance Report and taking into close account the shift of key shopping dates on this year’s calendar, we can see how “Big Data” findings translate into actionable insights to help drive sales and profits in the next two months.

This holiday, the calendar and smart staffing are the keys to seizing sales. These insights should help you plan:

  • Start hiring and training now: Across the board, retailers are missing early season traffic by not having enough staff the first two weekends in November. Many extend their existing staff first before hiring new associates or don’t have new hires trained in time to hit the selling floor before mid November. Some degree of newly hired, trained sales associates need to be on the floor by the first Saturday of November. Hire in shifts or increments, to accommodate the high weekend traffic in early November. Look at the by-hour and by-day traffic to conversion comparison from the past few months or last year, if you can. You’ll have chances to shift staffing to where you need it most.
  • The two-day gift: This year, there are 32 versus 30 days shopping days between Thanksgiving and Christmas. Looking at the calendar, the extra days fall on a weekend. The Saturday before Christmas in 2011 was Christmas Eve, which from a sales perspective was not impressive (15% sales drop versus previous year). This year, the weekend before Christmas has tremendous potential and will mean high traffic demand. This is the TOP opportunity for 2012 so go all out and staff the weekend optimally.
  • Hanukkah comes early: The dates for Hanukkah are Dec. 8 – Dec. 16 this year, versus Dec. 20 – Dec. 28 last year. Understand the markets where this will have an impact on the business and plan ahead.
  • Watchful Wednesday: The day after Christmas should be treated like Black Friday. Most retailers experience similar high traffic on the 26th. Last year, Dec. 26 was on a Monday and a work holiday for most customers. This translated into a major sales uptick from 2010 (traffic was up 27% and sales up 24% for RetailNext clients). It needs to be protected from a potentially disappointing sales drop so have a detailed plan ready for deployment.
  • “After” traffic is good traffic: The post-Christmas sale is an opportunity for most retailers. Traffic continues to hit stores only to find the Holiday help, beyond the Service Desk, gone! Sure, there is a conversion drop resulting from returns, however, the customer mindset is still in “shopping mode.” So, ensure you have the staff to help drive that buying indecision forward. After all, wallets will be full of very trendy gift cards that need be converted into a sale.
  • The “eves” could be huge: Last year, Dec. 24 fell on a Saturday with traffic and sales dropping 15% for stores within the RetailNext network. This year, Christmas Eve falls on a Monday, signaling a great opportunity to maximize conversion and sales. Additionally, Dec. 31 falls on a Monday this year, so many people will have the day off or leave early. Shoppers are still out in the stores and want to shop – and women’s’ wear could see particularly high conversion. Give them incentive to buy! 


Having access to big data insights and an understanding of how to interpret data – from traffic patterns to shopper behavior to POS reports – will prepare you to staff to demand during the holiday season. Add a closer look at the calendar with proper planning this holiday leads to optimized staffing and maximization of sales.

Remember, start early and nail that first opportunity which is Nov. 3 and Nov. 4. Let’s throw off those analysts touting a “low single-digit increase” and drive a double-digit increase. 


Shelley E. Kohan is VP of retail consulting at RetailNext and has more than 20 years of experience in the retail industry, focused on luxury brands within the department and specialty store sector. She is an expert in applied big data and retail store operations to drive sales, increase profits and improve “store choreography.” She is also an instructor at the Fashion Institute of Technology of the State University of New York, in the Fashion Merchandising Management Program. She can be reached at [email protected].


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More self checkouts (and customers?) coming to Walmart

BY CSA STAFF

NCR Corporation got a big order from Walmart this week that will allow the retailer to expand its self-checkout capability and potentially attract shoppers turned off by Walmart’s long checkout lines.

NCR said it would be installing 10,000 of its SelfServ Checkout lanes in more than 1,200 Walmart stores. That works out to about eight self checkouts per store, although the companies didn’t provide details concerning Walmart’s installed base of self-checkouts.

"Our customers are shopping differently than they ever have, and we’re using innovative technologies like self-checkouts to meet their needs," said Jeff McAllister, Walmart’s SVP of innovation. "Our multiple checkout options give us a unique advantage to provide our customers with the quick, easy and convenient checkout experience they tell us they want."

These are not new revelations on the part of Walmart shoppers who have long bemoaned the retailer’s lengthy checkout lines. It got so bad several years ago that as part of a strategy known as Project Impact, Walmart set out to make its store experience "fast, clean and friendly." There was much attention paid to the checkout process and Walmart executives regularly spoke of the benefits of a new labor scheduling system that was supposed to better allocate labor hours to peak shopping times and accelerate throughput at checkstands. It appeared to work for awhile, but lately lines seem to be longer (a purely anecdotal observation) and there is a renewed emphasis on labor productivity as a mean to drive profitability.

If the increased usage of self checkouts can help Walmart alleviate some of its front end issues that would be a good thing. There is a segment of shoppers who presumably would like to save money and live better by shopping at Walmart, but avoid doing so because it can, at times, mean waiting in line for extended periods of time.

Technology holds great promise and self checkout systems will take many forms in the coming years. They will become more prevalent and cashiers will become an increasingly endangered species. This is a point we made last week in an article about a new Sam’s Club in Kansas City. The article stated that, "Sam’s Club cashiers could become an endangered species if an expanded test of a payment platform at a new club in Kansas City is embraced by members."

Sam’s is testing a new checkstand configuration called a "convertible registers," that can be used by cashier or a customer as a self checkout. The net effect is every checkout lane is open all the time because members will have the option to check themselves out if staffed lanes are too long or they simply prefer the self service method. Sam’s currently has self checkout systems in about half of its roughly 600 U.S. locations.

Almost every retailer that has installed self-checkouts will declare that customers love them for their speed and convenience. Of course they do. But it’s not because shoppers love the technology and scanning and bagging purchases is so much fun. It is because many retailers made the checkout process such a miserable experience by curtailing staffing levels that any alternative is seen as preferable.

Some retailers will continue to offer ample cashier levels to showcase a commitment to service and as a means of differentiation. Meanwhile, the way things are going it makes you wonder if eventually retailers will follow the lead of the airline and banking industries and begin charging a cost recovery fees of those shoppers choose to interact with a human cashier.

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E-commerce and Mobile Shopping Revamps the Fulfillment Center

BY CSA STAFF

By Bill Leber, [email protected]

E-commerce continues to be a bright spot for retailers during the Great Recession. Additionally, the rise of the smartphone is leading us into our first true mobile holiday shopping season. Historically, the majority of the world’s consumer products have been distributed to retail stores in bulk, and the most efficient method for handling this merchandise has predominantly been pallet movement and full-case selection. However, in an industry where the forklift and conveyor belt were “recent” innovations, the e-commerce boom is fundamentally changing the nature of the retail supply chain.

As online shopping continues to compete with and, in many instances, overtake brick-and-mortar retail, retailers are looking for more ways to expand their multichannel operations. According to Datamonitor’s Global Online Retail 2011, the global online retail sector had total revenues of $434.6 billion (USD) in 2010. Additionally, the recent release of iPhone 5 received two million orders in the first few hours – just think of the impact this will have on mobile shopping during the holiday season alone.

New challenges
Due to this increase in online sales and fundamental change in where and how consumers shop, many retailers are outgrowing the traditional supply chain infrastructure and rethinking fulfillment. Retailers must evaluate many new factors. In addition to scheduled weekly store deliveries of pallets and cases, they must factor in split-case picking, item-level touches and multi-line item sortation to fulfill fluctuating volumes of online orders that frequently require delivery to consumers within 24 hours.

Take these challenges and compound them with the emergence of mobile commerce, or “smartphone shopping.” The instant gratification culture that has taken over with the growth of mobile has put a greater burden on the retail supply chain to deliver more products faster, quite literally from mobile device to doorstep in a matter of hours, not days. The distribution center is now the store.

The ‘new breed’ of retail e-commerce consumer expects a lot more in addition to competitive prices. They require cross-channel services such as “click-and-collect” and “order-to-deliver” wider online SKU offerings in-store kiosks; consistent brand experience across the brick and mortar and online storefronts; order accuracy; fast and free delivery; free returns through any channel; and a mobile retail site.

Fulfillment for e-commerce
When consumer needs are compared to the challenges of distribution in an e-commerce environment, there are significant obstacles for fulfillment. These include:

a) Large SKU counts with a very long, slow-moving tail;
b) High and unpredictable growth;
c) High penalty for poor performance resulting in potential brand damage;
d) Uncertain business terrain that demands flexible and adaptive solutions;
e) Demand for real-time and accurate inventory visibility;
f) Small number of orderlines per order;
g) High returns from end customer; and
h) Extreme peak season volumes.

The challenge with the e-commerce fulfillment process relates to having the right systems in place to dynamically process orders for e-commerce channels, versus historical store re-stocking fulfillment. Within e-commerce, where unpredictability is a constant factor, flexibility in the supply chain becomes critical. Retailers can gain flexibility by implementing the right system, one that can support the fluidity that e-commerce cross-channel services require.

Leveraging new dimensions for fulfillment
E-commerce fulfillment is fundamentally a piece-pick operation, which is historically a hands-on procedure. The right automation will minimize manual touch, resulting in more accurate orders, improved ergonomics, reduced labor costs and travel time, decreased returns and saved space by operating in a smaller footprint.

The gold standard of flexibility for any e-commerce business is to be able to easily increase fulfillment throughput and SKU density over time in a capital-efficient manner. Such an automated order fulfillment system should be able to scale seamlessly with a business year after year.

The age of data
The emerging solution for efficient and timely e-commerce order fulfillment is one based on an integrated warehouse management system driving an automated storage and retrieval system, married in the end to efficient goods-to-person piece picking technology. Systems using fast shuttle or robotic bin technology can ensure that real time inventory is always accurate so that when customers place orders, confirmations of the pick and pack process can be provided back to the consumer in less than 30 minutes. The result has been the emergence of new retail supply chains that are consumer-focused rather than product-focused.

Parting thoughts
E-commerce, and now mobile shopping, are fundamentally changing the nature of the retail supply chain. Retailers must learn how to adapt to rapidly expanding and changing e-commerce conditions. Efficiently optimizing inventory, storage space, labor, costs and time in e-retailing is required to attain not only customer satisfaction, but a profitable operation.

Bill Leber, is director of business development, North America at Swisslog, a global provider of integrated logistics solutions with a focus on the retail, food & beverage, pharma, and healthcare industries. He can be reached at [email protected].


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