Deck the store with stock that's marked-down
Christmas can be a difficult time of the year for all of us. Yet, in the midst of all the stressed shopping frenzy, nobody spares a thought for the retailers. Debby de Moor, Senior Consultant, Global Logistics and Caren Brown, Retail Consultant both at Capgemini discuss how retailers are managing Christmas trading.
1 December 2006
Publication
Retailers are working all hours to source and import enough socks and underpants
to be snapped up by aunts and uncles up and down the country. Or stocking plenty
of the all-important Christmas crackers for every household. They don’t just walk
through customs and unload themselves in the warehouse by magic. What about the
effort that goes into ensuring that turkeys across the land will be stuffed with
chestnuts and apricots and flanked by a battalion of chipolatas - who do they
think clears the way for this feast?
Although the majority of retailers expect a significant increase in sates over
this period, Christmas really gives the marketing and buying teams free rein to
introduce all sorts of unique and daring promotions and offers. All too often,
however, stock is either delivered late or in the wrong quantities, leaving stores
and warehouses with an excess of products that aren’t going anywhere until next
December. For grocers the problem is more significant because, let’s face it,
sitting down to brandy butter and Christmas pudding in the middle of January just
isn’t right.
Over the past few years price markdowns have become an everyday occurrence on the high street. Sometimes this is through proactive marketing campaigns to drive customer footfall and market share. But they are generally perceived to be a reaction to overcoming excess stock issues and a ‘necessary evil’ to clear space for new seasonal ranges. Our experience indicates that the total markdown can result in 8-15% reduced revenue for an average retailer - an expansive way to create space.
So how do the best retailers get it right?
Minimise the number of passengers’ in the range – there should be a clear understanding of who the customer is, what product appeals to them and what environment they enjoy shopping in. It is essential that different products are targeted at different customers, whilst ensuring that the overall look, feel and presentation of the range remain consistent. Keeping up-to date with changing customer tastes is critical and detailed store and competitor visits should be undertaken regularly, while keeping dose tabs on how trends affect the product mix.
Planning is not a one-off exercise - the key is to get the quantities and timings right and avoid too much stock being delivered too late, leaving less time to sell the original quantities. Done properly it should result in the optimal amount of stock being delivered at the right time to the correct stores.
Get everybody ready - the best plans are only as good as their execution. The allocation of stock to stores and store disciplines are vital in ensuring that the plan is implemented where it matters: on the shop floor. How can products be replenished effectively if the stock figures cannot be relied upon and if there’s no space to merchandise and present them?
Unplanned markdowns are only a last resort - huge importance is attached to working with suppliers to cancel or substitute orders. The entire supply-chain needs to be adaptable and flexible to changing consume demands, and plans constantly need to be reviewed and updated.
The result of all these efforts? More sales at full price, less overstocks and happier customers and store colleagues.
So join us in raising a glass of (full priced) Cava to say thanks to thanks to all retailers for their hard work in getting Christmas ready. And here’s to a New Year where Cava is hopefully fully stocked and back on the shelf still at normal price.
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