28 May 5 Ways Predictive Analytics Help Retailers on Mother’s Day
At $20 billion in sales, Mother’s Day is the third biggest selling season for most retailers after Christmas and Back-to-School. By leveraging predictive analytics, retailers can make sure they’re maximizing their return on the event. Predictive analytics can help you forecast demand, uncover which products have uplift potential, allocate merchandise across channels and stores, and optimize your timing, pricing, and promotions. It takes the guesswork out of merchandising for you as a retailer, so you won’t fall victim to these common Mother’s Day retail challenges:
1) Identifying unexpected seasonal merchandise within your assortment
As a retailer, you already know that categories such as jewelry, flowers, and gift cards, will see a huge uplift on Mother’s Day, but categories with no uplift may have potential high performing anomaly items within them. The problem is that most retailers will miss these would-be hot-sellers because they don’t have the ability to see data at a more granular level like SKU/store.
Even if a retailer does look at the SKU/store level they may still miss the true sales potential of the item during the seasonal peak. This is because last year’s sales do not represent the item’s true demand. When an inventory analyst looks at last year’s sales of a Barbara Streisand CD, they may not see a spike on Mother’s Day because the item was never considered seasonal and only regular quantities were stocked year after year. An advanced predictive analytics system will identify the true demand of every single SKU/store, enabling retailers to take advantage of high-performing Mother’s Day products that they’ve never considered before.
2) Optimizing purchase order quantities for Mother’s Day
Now that you’ve identified which SKUs have a potential uplift on Mother’s Day, you’ll want to take advantage by carrying additional inventory for this event. But how much additional inventory should you buy?
When determining an optimal purchase order quantity there are many factors you should consider. If a retailer is selling scarves for Mother’s Day, they’ll need to consider fabric, style, size, and color. These decisions need to line up with demand to avoid being left with less popular styles and colors at the end of the seasonal event. Not every style and color will be sold equally, nor will all stores perform the same. Moreover, if you’re introducing a new “infinity scarf” this year, how will it affect the demand of your original scarves?
A predictive analytics engine will look at dozens of influencing factors and their interrelations simultaneously to build a highly accurate demand forecast and recommend optimal purchase order quantities. The solution will intelligently identify any potential shifts in demand due to product cannibalization and build optimal size curves while accounting for the depth and diversity of the assortment.
3) Omni-Channel allocation of Mother’s Day merchandise
According to the NRF, the average customer spends $163 for Mother’s Day, while the average online Mother’s Day shopper spends 55% more. Some retailers fulfill eCommerce through DCs, others directly through stores. As consumer behavior continues to evolve and retailers’ interactions with customers change, merchants need to be able to proactively allocate inventory to the best channels/locations to offer flexible fulfillment options and maintain a consistent experience.
Given the short nature of Mother’s Day, this is something retailers must get right the first time. Predictive Analytics can proactively recommend how to allocate your inventory at a SKU/store level, based on your business rules, capacities, policies, upcoming promotions, and forecasted demand.
4) Optimizing the timing of orders, merchandising, and promotions
Mother’s Day isn’t just an event that happens on the second Sunday of May.
The start and growth of Mother’s Day demand will vary by store and channel. Just as with identifying Mother’s Day would-be hot-sellers, retailers may miss out on early/post Mother’s Day sales as well. Inventory analysts will often miss potential spike in demand in the days before/after they usually bring in their inventory, due to never having stocked these items at the right levels in previous years.
Predictive Analytics will not only help you take advantage of all potential demand before/after the seasonal event across all your stores/channels but will also protect you from vendor lead time variability, and the risk of incomplete, early, or late shipments.
5) Get your Mother’s Day pricing and promotions right
Retailers know that not all products react the same to changes in price. Some products are heavily influenced by discounts, whereas others have an optimal price.
Predictive analytics technology analyzes each product to determine if sales are driven by discounts or by optimal price and makes recommendations to maximize profitability. The technology also understands the effects of different media types and best timing of promotions.
Most retailers will run promotions with minimal consideration of inventory. Moreover, an integrated predictive analytics platform unifies promotions with inventory management. The solution accounts for on-hand, in-transit, and on-order inventory, forecasted demand, and upcoming promotional uplifts, to recommend the optimal incremental inventory needed for a successful promotion.
Be Proactive & Reap the Rewards
Stocking the right products, in the right places, at the right time, combined with a pricing strategy based on predictive analytics, allows retailers to maximize Mother’s Day profitability. Retailers can rely on one unified platform that can account for all elements of a business to proactively give you the optimal recommendations. Typically, retailers who implement a comprehensive predictive analytics platform see a significant decrease in inventory costs with a simultaneous boost in sales due to a more optimal assortment. Predictive Analytics can really turn seasonal peaks such as Mother’s Day into highly profitable events.
Adrian Silipo is the Marketing Manager at Retalon, an award-winning provider of retail Predictive Analytics solutions for planning, inventory management, merchandising, pricing, and promotions. Retalon’s solutions are built one unified platform to account for all factors influencing your business. Learn more at www.retalon.com.