It's virtually impossible to walk down any high street today without encountering a store holding a sale. Sales were, once upon a time, A Big Thing: many Retailers held New Year January Sales and then another Summer Sale mid-year and that was about it. Now, they're an ever-present retailing feature and, although some retail business models have been deliberately engineered from a Marketing perspective to capitalise on the emotional draw of discounts, the reality for many Retailers is that they all too often have the wrong volumes of stock in the wrong locations at the wrong time. Add competitive pressure layered on by e-Commerce adversaries and 'The Sale' becomes omnipresent and ubiquitous.
Consumers have become attuned to this new reality. Why pay full-price for a product (or service) when you know full-well that it's likely to be discounted pretty soon? It's just another swollen challenge in the world of today's retail.
During the work with our friends and partners at Crawford IT founder Craig often quotes a numbing statistic from the Fashion Apparel domain: major brands, on average, achieve a full-price sell-though rate of 30% and then congratulate themselves for this figure. Which, of course, means that a staggering 70% of stock is being sold at much, much less than RRP... At a time in history when Retailers are under more cost and operational duress than ever before it is essential that they maximise margins not merely to grow but in the current climate, simply to survive.
Retail Digital Transformation to arm the business with the requisite tools and strategy to counter the threat is a must. This means creating an holistic, conjoined approach to understanding customer behaviour, acting upon the insights contained deep within data and at the same time, creating actionable outcomes to maintain - and even improve - margin. Examine the upstream elements of the Supply Chain to ensure that inventory is being optimised, not minimised - improve Demand Management processes by adding a more granular understanding of the drivers of that customer demand and position optimised volumes of the right stock to meet customer expectations whilst meeting pre-determined service levels. But do so without creating excess inventory which will, in the near future, require margin-eroding markdown to shift...
Easy, isn't it?
By which I mean, of course, it isn't. But the need to create a digital continuum of transformation isn't an option: today's modern Retail organisation needs a data-centric approach which puts understanding fickle customer behaviour at its heart. Incorporate Supply Chain activities and get personal with precisely how, what and when your consumers shop for your products and services. Innovate by offering a more cohesive, compelling Customer Experience (CX), complete with personalised promotion capability to not only retain customers but increase their Lifetime Value (LTV) figures by targeting them with items they actually want and for which they will pay full-price.
The key, as always, is data. If you're struggling with juggling it in the lock, we should talk...
Markdowns don’t have to wipe out your margins. Be smart about your promotions and pricing by ensuring that your offers are delivered to the right people at the right time.