The Retailer Winter edition_2020

Market insights and trends

Holiday Post-Mortem: Lessons Learned from Seasonal Retail Challenges

PAUL REDSULL CLIENT SERVICES DIRECTOR, UK RETAIL PRGX Global Inc

STEPS YOU CAN TAKE NOW TO BOOST YOUR BOTTOM LINE FOR THE NEXT HOLIDAY SEASON Now that the book has closed on the busiest season of the year, retailers are assessing errors, losses and a flurry of returns due to the large volume of transactions. Add to this the need to close out special deals and promotional funding programs by the fiscal year deadline, which for many can be end of Q1 2020. While this can seem like a recipe for post-holiday blues, taking the right steps early in the new year can make all the difference. Two tactics make the most impact - first, know where to look to detect and recover any errors that may have occurred -- then take steps to improve processes going forward. Know the Pitfalls Promotional Funding During the holidays, promotional funding ramps up to meet often aggressive sales revenue goals. Many launch events, special purchase offers or even giveaways are used to lure in shoppers. Funding and negotiations between buyers and suppliers can be complex and competitive. Markdowns are also essential to promotional funding. When the new year dust settles, it’s especially important to examine last season deals. Many seasonal products are slated for markdown at the end of the holiday – a consistent source of funding loss. Re-examining markdown windows is a vital post-holiday step that must include careful review of clearance retail. Seasonal Pricing Negotiated price deals are another holiday tradition for both regular merchandise and special holiday items. Everything from smart TVs to confectionary tins require careful examination to ensure purchases as recorded reflect the correct price. It can be easy to miss, especially if one error offsets another amidst Similar deal types. Every day low price (EDLP) and holiday deals are distinct categories, used by executives to achieve specific goals. However, they can easily be confused. Verify each pricing program to ensure all are collected appropriately. • Overlapping deals. With so many concurrent programs, it’s important to review all dates to ensure no ongoing or concurrent deals were overlooked. • Last minute negotiations. Deal-making (for promotions and pricing) can continue throughout the season, making it vital to verify that all were incorporated into systems and any manual adjustments made at point of purchase did flow through all of the systems correctly. the crush of holiday transactions. Some trouble areas to look out for: •

E-Commerce For UK retailers in 2018, total retail e-commerce sales hit £96 billion and “will account for more than one-fifth of total retail sales in the UK this year, and that proportion will reach 26.8% by 2022,” according to eMarketer. As more retailers seek market share to keep pace with competition, complexities increase in accounting for often varied policies. These may include ensuring consistency in applying policies such as matching (or not) online prices for in-store sales or accepting (or not) store returns for online purchases. Shipping Deals E-commerce is just one factor making shipping deals more complex than ever. In addition to tracking pricing for ship-to-store and ship-to-customer, retailers may be supporting shipping deals under a variety of models such as offering holiday truckload deals and direct plant allowances ship to warehouse. Pre-Orders Despite how it may feel, the holidays don’t sneak up on anyone. Pre-orders go in place early, helping build a pipeline of expected revenue. Their timing can complicate things, since orders may ship well before the negotiated holiday period begins. January is prime time to carefully re-evaluate to confirm complete funding is received. Prepare for Success Recognising the pitfalls of the holidays is just the start. Smart planning for the next holiday means approaching this year’s challenges by applying these insights in practical ways. 1. Negotiate Deals that Anticipate Change. Despite preparation, pricing can change. If EDLP pricing changes, explore opportunities to protect or maintain margin – especially on higher cost merchandise. When negotiating promotions, watch timelines and ensure there is no funding gap. This is important both immediately after the holidays, when many new year promotions go into effect, and in planning ahead for the next holiday season. 2. Take Note of Atypical Deal Windows. Holiday schedules can wreak havoc on standard weekly or monthly deal windows – yet these are evident well ahead of time. Avoid confusion by planning carefully for contracts and promotional setups, especially during these times: • 8-day ad to include New Year’s Eve • 12-day ad for Christmas ending Christmas Eve • 12-day ad for Black Friday including Cyber Monday

Today’s increasingly complex holiday retail requires consistent and comprehensive review of suppliers, contracts and processes.

26 | winter 2020 | the retailer