Now that the parties are over and the decorations stored away, most of the world has put the holiday season in its rearview — but not retailers. Although their storefronts and advertising campaigns may tell a different story, retail organizations are already planning for the 2022 holiday season.
Since the pandemic began nearly two years ago and upended supply chains throughout the world, retail leaders have learned their lesson: fail to prepare, prepare to fail. In 2021, they faced a number of obstacles that many companies didn’t, or rather couldn’t, anticipate in time for the holidays, from spikes in demand to material shortages. Had retailers operated with a more advanced approach to predictive analytics, using external, real-time data to look forward and react to shifting circumstances, as opposed to a traditional reliance on historical data, they might have foreseen these constraints — and, in response, stocked up on the products they needed.
Although hindsight may be 20/20, retailers had plenty of it by the end of 2021, and now in 2022 they’re looking to regain control before the next holiday shopping season. Following are three key takeaways from 2021 that will shape retailers’ strategies in 2022 and beyond.
Enhance predictive analytics capabilities. In the new normal, retailers will have to become more agile, but with outdated digital infrastructures and a reliance on historical data, they’ll stay stuck in the past. To break from tradition and make the most of their busiest time of year, retailers are increasingly looking to enhance their predictive analytics capabilities. Predictive analytics utilize data mining across historical and real-time sources, as well as predictive modeling and machine learning methods, to anticipate potential scenarios and forecast trends and behaviors. Although many retailers didn’t dedicate the time or resources to implement these tools at scale before the 2021 holiday season, they’re far less likely to make the same mistake twice.
Hone pricing and supply location strategies. The ability to predict months in advance is critical to enhancing holiday sales, but so is responsiveness to shifting sands during the season. To make the most of the expected increase in demand during the holidays, retailers are reviewing their pricing and location strategies and proactively planning their new tactics in preparation for the 2022 season. But to do so, they’ll need to adopt technology offerings that will allow them to optimize inventories and engage consumers across channels. In the lead-up to this year’s holiday shopping season, retailers will increasingly utilize and refine scenario modeling tools and advanced predictive forecasting capabilities, which will help them identify the optimal channel, region and price to reach customers and sell products throughout the holidays.
Implement incentives for those who wait. Sometimes, good things really do come to those who wait. This will be especially true in the new normal for customers frustrated with limited options on big-ticket items, such as furniture and appliances. To meet consumer demand throughout the year and help offset supply chain activity during the next holiday rush, retailers can offer incentives to delay orders, including guaranteed delivery or customized promotions for those who are willing to be patient. By putting these orders off by 10 or even 20 weeks, retailers can alleviate their stretched supply chains, while ensuring consumers are still able to purchase their desired products.
However, this will require companies to put their money where their mouth is — or better yet, their data. In 2022, business and IT leaders will dedicate significant resources to their data-management agendas in order to access and employ real-time data, and ultimately achieve a high level of predictability for delayed orders. Specifically, retailers will need to calculate how many products will be available, when they’ll be ready, and in which regions. And to maintain customer trust while implementing these incentives, retailers will also need to restructure their consumer engagement strategies, creating coordinated communication campaigns to update consumers on delays and shipping times.
As retail companies continue to face obstacles in 2022, it will be essential to optimize limited inventories across their channels — not only to prepare for the next holiday season, but also to maintain their competitive edge throughout the year. Rather than reverting to traditional methods of utilizing historical data, retailers will look harder, deeper, and more broadly at supply chain signals that only real-time, data-driven solutions can provide.
Jason Fisher is managing delivery architect, insights and data, and Joel Alpert is IT transformation director, insights and data, with Capgemini Americas.
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