Certainty exceeds discounts in 2021 peak trading

Global supply chain disruption could not have come at a worse time for UK retailers desperate to maximise the potential of an ever growing online customer base during peak trading season. But with costs spiralling and many products unlikely to arrive in the country in time for Christmas, let alone Black Friday, retailers need to bring plans forward if peak season is to deliver an essential revenue boost.

Growing awareness of the likely shortages is changing expectations – and switched on customers are beginning to prioritise certainty over price, especially for time sensitive Christmas items. Retailers with great inventory information, a flexible promotions model and excellent fulfilment will be able to deliver the certainty and control required to meet expectations – and, as a result, minimise discounting, even during peak season.

Getting every aspect of this model right is key, as James Hyde, Founder of James and James Fulfilment explains, a value added fulfilment provider can combine excellent inventory insight with promotional support to ensure retailers maximise every peak trading opportunity.

Changing Behaviour

Shopper behaviour always changes during peak season, as people look to bag a bargain on Black Friday and stock up on Christmas treats and presents. This year, however, the changes are likely to be more pronounced, with concerns already raised about the availability of items, including food and toys,  due to the global supply chain problems.

Forecasting demand has become ever more complex due to the unprecedented changes in customer behaviour over the past 18 months. While online retail grew 36% in the UK during 2020, according to the IMRG Capgemini Online Retail Index, some sectors, including gardening (222.5%) and electrical (90.8%), experienced an extraordinary surge.  The new complexities of inbound supply chain challenges are driving further changes in customer behaviour. As the consumer base becomes increasingly used to out of stock notices online and gaps on supermarket shelves, buying decisions will be influenced more by delivery certainty than price, especially for Christmas.

For retailers, this peak trading season raises new challenges but it also provides new opportunities to maximise sales without necessarily embarking upon the now traditional big discounts for Black Friday. While customers expect 25% off at least on Black Friday, is that discount really affordable this year, given spiralling wages and delivery costs? A retailer with stock already in place and confidence in its fulfilment model is in a strong position and can drive additional revenue from customers willing to pay more for delivery certainty.

Intelligent Planning

Planning ahead is vital if retailers are to maximise peak trading season and, critically, deliver on their promises. Retailers need to know what they have, and what they can deliver, when. Vague promises are not good enough. What’s in stock today? What can be promoted? How fast can the business respond to customer demand?

Up to date, accurate supply chain information is essential: promoting products online that are not yet in the warehouse – or even in the country – is a fast track to customer disappointment and brand damage. Edgy customers will quickly contact customer services if products do not arrive on time, adding even more cost to the business. Retailers need to be realistic about fulfilment promises – customers would rather get a product at the agreed time than be offered over-optimistic next day delivery options.

Retailers also need to be proactive about the use of promotions to control the sales process both to maximise sales and minimise the risk of fulfilment delays caused by excessive demand. Carefully curated and managed promotions will play a key role both in slowing down sales of popular items to ensure fulfilment can be managed effectively and boosting the uptake of slower moving goods.

Maximise Existing Inventory

Given the delays to inbound stock, especially from the Far East, 2021 peak trading season is also set to be a great opportunity to revisit the slow moving lines that are clogging up expensive warehouse space. Not only will this address the ever present problem of ageing stock but, with items already in the warehouse, retailers can confidently promote stock to the customer base with the certainty of delivery by a set date.

Taking the time now to assess old stock, identifying any items that may fill the gaps created by supply chain delays and developing specific promotions will put retailers in a great position to respond to  customer demands. Adding flexibility to the sales process, such as including an extra 10% discount on the website to encourage conversion for products that are not shifting can also make a significant difference in overall sales levels.

This could, of course, be a demand too far for any retailers trying to manage every aspect of this process internally. Scaling up for peak season is always tough and this year it is likely to be even worse. In addition to the well-publicised lack of delivery drivers, staff shortages are making it difficult to recruit to cover the spike in warehouse demand. And with limited stock available there is no leeway for damages or losses: fulfilment efficiency is a priority.

Fulfilment Expertise

Retailers cannot do it all alone – which is where third party fulfilment services can step in. Dedicated fulfilment providers are better placed to scale up in response to peak season demand. With strong inventory management and real-time analytics and reporting, retailers have the certainty of knowing exactly what products are in stock and that customer orders will be fulfilled in time – leaving the business to focus on managing the customer offer and running the best promotions to maximise sales.

Plus, a fulfilment provider can work with retailers throughout peak trading to put in place delivery promises that are realistic and achievable – enabling a retailer to deliver the customer certainty that will be key to winning business in 2021.

Getting it right is incredibly important this year - with the new  online consumer base created during 2020, the pressure is  to deliver a great experience that creates long term, loyal customers. Retailers need to start planning now if they are to meet customer expectations and still maximise profitable, peak trading revenue.

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