Three lessons retailers can take from the 2019-20 peak season

Phil Reuben, executive director at SCALA, a provider of management services for the supply chain and logistics sector.

2019 was another turbulent year for the UK retail sector.  Interestingly, however, the September-January “peak season” often defied expectations – around the Black Friday sales weekend in particular – with sales and footfall both up compared with 2018.

Given this unpredictability, it is more important than ever for retailers to ensure that their supply chain and logistics offering is set up to efficiently cope with peaks and troughs in demand, ensuring that retail brands can defy the wider sector downturn and continue to grow.

Let’s look at three key learnings from the most recent retail peak season, and how they can apply to retailers looking to flourish in an increasingly-challenging sector.

Look beyond Black Friday

While the Black Friday weekend remains a pivotal date in the retail calendar – as evidenced by this year’s surprise uptick in sales – it’s no longer the be-all-and-end-all.

Because limited-time sales such as Black Friday are designed to cause a significant spike in orders – which naturally profits retailers – they can also cause intense strain to businessses’ supply chains. This in turn makes it far more difficult for retailers to consistently fulfil orders on time, or even at all, and meet evolving customer expectations.

Given this, we’re increasingly seeing retailers spread their discounts over a longer period of time, moving from major sales weekends to full weeks, or even months, of strategic discounting over the peak period. Going forward, retailers should therefore learn from the delivery challenges of recent years and look to spread the Black Friday sales over a longer period, in order to generate a more manageable influx of demand.

Businesses must assess their cost-to-serve

Factors such as increased competition and the rise of multichannel retail have brought about increased customer expectations, which often take the form of delivery options such as next day or named-day delivery, as well as the freedom to shop anytime, anywhere.

However, this need to provide customers with increased freedom and flexibility also means that, to maintain profitability while meeting customer expectations, retailers must ensure that they are aware of the exact costs they will incur at product and customer level, which often vary significantly.

While assessing the true cost-to-serve can be complex, requiring a regular evaluation of real order and activity data based on true costs, understanding this has a major positive impact on profitability. For retailers struggling in this regard, the experience of an expert consultancy can prove invaluable.

Accurate forecasting is crucial

Particularly during the peak season, a significant cause of stock discrepancies – whether wasted surplus, decreased volume if a retailer should promote a competitor’s product range, or crippling product shortages – can be poor communication throughout the supply chain. This in turn means that suppliers are unaware that a retailer’s promotion – for example, a Christmas or New Year’s flash sale, which can greatly inflate demand – is either coming up or coming to an end.

As such, effective forecasting and clarity of communication throughout the supply chain are critical for enabling retailers to plan ahead for the peak season and better manage shifting stock levels and customer demand.

Overall, the 2019-20 peak season has been a telling reminder for retailers that, despite volatile trading conditions, it’s still crucially important to plan ahead and be prepared for

spikes in customer demand. The retail brands that can effectively prepare will be those best placed to not just survive, but thrive, in 2020.

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