How Holiday Sales will Impact Retail in 2012

Data Profits’ Predictions for 2012 that Retailers need to Know Now

The official holiday shopping and Christmas season kicks-off this weekend, and is considered a bellwether for the retail industry, as this is the time of year when retailers earn up to 40% of their annual profits. Everyone is watching to see:  will post-election results and the continuing shaky global economy drive shoppers back into their recessionary, frugal spending habits or will they be more willing to loosen purse strings?

Another major trend that industry insiders are speculating about is the influence of social media and ecommerce on this year’s holiday shopping season. Will consumers seek and find the best deals from their sofas by using their device of choice, avoiding the mob scenes at the Malls all together? With so many big questions looming, what can retailers do on the eve of the 2012 Holiday Shopping season that will make a strategic impact?

Here are Data Profits’ three counter-intuitive predictions, which if followed, will enable retailers to increase profits during this busy time.

Are you Demand Driven?

The retailer using the agile and intelligent supply chain connected vertically to their external partners and horizontally to their internal legacy systems will rise above the competition. A retailer needs demand forecasting, supply chain visibility, agile – automated alert tools and scenario builders to guide the remaining decisions left for holiday 2012. Even though powerful solutions, like Data Profits’ software offering custom alerts and BI tools are readily available, the reality is that many retailers do not focus on the need to be agile and demand driven. Gartner Group’s research mirrors these thoughts in Mike Griswold and Kevin Sterneckert’s article titled: “Demand and Supply Matching: How Retail Supply Chains Enable a Successful Holiday Season” (available via Gartner).

Prediction #1: Holiday Sales will be up 3-5 % year-over-year

How are you using available data to chart your company’s course through this holiday season?

As our name suggests, we believe in the power of data, so much so that we forecast holiday performance by the retailers in part by reviewing back-to-school data. There is a solid correlation, displayed over many years, between the back-to-school- and holiday-shopping seasons. As such, we believe retailers should use back-to-school sales performance as a strong barometer for holiday-season sales.

Prediction #2: Data will be the difference this year.

Data is going to be the key to retailers’ success this 2012 Holiday Sales season. The average retailer has hundreds of data points that they track on an on-going basis, but what they don’t know is that they are tracking the wrong pieces of data. Most retailers have their holiday season planned by September, and then expect to ride the rails through January 1st. Best practices show that retailers who are active and who have agile and intelligent supply chains connected to the right data points leading up to and during the holiday-shopping season are more profitable by nearly 2 to 1 odds.

Here are the data points retailers should be tracking now:

1. Demand forecast: Days Supply, What is impacting the forecast, what is the net change, will it repeat.
2. Lead-time: Days Supply and Shipping Days needed to restock the shelves.
3. Inventory Replenishment: What should be pushed out and when/if to re-order inventory
4. Promotions: how will advertising and social media change the demand curve?

Prediction #3: Biggest Black Friday Profits start After Thanksgiving Day Weekend

Already, ads are running that state Black Friday is starting on Thursday this year. And we anticipate the press will cover the employee work hours after Thanksgiving and will kick-up the annual hullabaloo on this topic. Retailers cannot help but get embroiled in the negative press about making employees work crazy hours.

Many analysts suspect that consumers will shop the initial deals and then wait on the sidelines until significant deals appear. Like last year, the weekend after Black Friday has the opportunity to be a ‘dud’. The Demand driven retailer is already aware, and their demand forecasting solution has already highlighted the opportunity after Black Friday. While avoiding Thanksgiving Day sales distractions, we predict that demand-driven retailers looking to differentiate themselves will focus their marketing efforts on the weekend after Black Friday: Nov. 30 and Dec. 1-2. Why? Distraction-free selling that leads to 15-20% increase in profits over same store/ same week last year.

Prediction Wrapup

DataProfits’ three predictions this year highlight:

1. Sales growth of 3-5
2. Importance of a Data-Driven Supply-Chain
3. Thanksgiving Day Weekend will be eclipsed by the following Weekend’s Sales for retailers who follow Demand

Do your inventory management and optimization systems give you the tools to excel this holiday season? Is it time for you to ‘Tighten the Links in Your Chain™?’

Copyright © Data Profits, Inc. 2012 All Rights Reserved.

• About
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Stuart D

Stuart Dunkin is a strategic visionary who leads by calling on his broad range of experience as a former retail executive as well as a consultant for top retailers and for the E3/JDA software company. He founded Data Profits to solve a real-world problem plaguing retailers today – the disjointed relationship between supply chain data, people and business goals. He has experienced first-hand the challenges and frustrations that occur when decisions are made based on wrong data, which often leads to the wrong actions being taken with crippling results like overstock, out-of-stock, and increased working capital.
Stuart graduated from Auburn University, with bachelor of science in business administration.

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