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The Upcoming 2011 Holiday Buying Season will again Test Retailer MCO and Supply Chain Capabilities

Guest Post By
Bob Ferrari, Executive Editor, Supply Chain Matters blog

Just about a year ago,I penned a guest posting on the Infosys Supply Chain Management blog that commented on the pending 2010 holiday buying season and how consumers would test retailer multi-channel operations (MCO) and synchronization. In our commentary, we cited three trends that would manifest themselves in 2010, namely.
1.Far more value-oriented shoppers would embrace just-in-time shopping techniques, balancing perceived best price with product availability.
2.A more empowered consumer who would gain the information advantage by deeper utilization of online shopping and research tools.
3.The state of product demand planning and inventory management among retailers becoming more advanced.

When all the dust had settled, consumers indeed tested these capabilities, using a variety of online and mobile applications to search, shop, and ultimately fulfill their holiday buying needs. Online retail sales reached an all-time high in 2010. Retail visits were frequent as shoppers, after doing preliminary homework, visited physical stores to touch and feel products, or to partake of the classical mall shopping experience.

As we approach the 2011 holiday season, the environment has somewhat changed, requiring retailers to adjust their supply chain fulfillment strategies.On the one hand,continued unemployment and eroding economics across the global economy reinforce the presence of value-oriented, frugal shoppers.Then again,there may be that one special item that shoppers have placed on the holiday gift list for months.  Retailers themselves have shifted more investments toward their online presence.As an example, electronics retailer Best Buy has augmented its online assortment by 20,000 items.Similarly,Target and Wal-Mart and other general merchandise retailers have boosted their online capabilities and product offerings. Overall,retailers performed a decent job in forecasting holiday demand,managing promotions and overall inventory in the 2010 season.

What therefore should retailers expect in the upcoming 2011 season?

A recent survey conducted under the auspices of the National Retail Federation (NRF) notes that nearly 70 percent of online retailers expect their holiday sales to grow at least 15 percent or more.Yet, many retailers are expecting a muted amount of overall holiday sales, and have reflected that belief in conservative buying and inventory staging.The NRF is forecasting that the average shopper plans to accomplish 36 percent of their holiday shopping online vs. slightly under 33 percent last year.Online retailers are also planning to start their promotional activities much earlier,hoping to capture consumer buying impulses and avoiding consumer tendencies to wait for the late season price promotions that have occurred in prior years. Consider also that last year's most popular items were high end electronics,specifically smartphones and tablets, followed by children's toys and gifts.

But something else has fundamentally changed,something that relates directly to product availability and retailers ultimate capabilities in inventory allocation and multi-channel balancing.

Supply chains have experienced a year of unprecedented disruption, starting with the floods in China at the beginning of the year,the devastating earthquake and tsunami that occurred in northern Japan in March, and currently the devastating monsoon floods that have impacted Thailand and adjoining regions of Asia.There are warning signs and alerts stemming from automobile, disk drive, camera, printer, and soon,PC and smartphone manufacturers regarding dwindling supplies and shortfalls in production.

Last year we cited multi-channel commerce and supply chain fulfillment augmented by demand-sensing and supply-chain wide agility as important capabilities for retailers in 2010. That turned out to be true.

Supply Chain Matters believes that a new dimension will unfold in the coming weeks. One will be that of not having the most popular and desired products the consumer desires, because suppliers will fall short of meeting holiday demand spikes.Consumers are far more astute in noting trends and will be highly sensitized to potential product shortages of the most desired products.

The other will be properly planning for the right alternative products, or insuring that bets on other products do not turn out to be busts because consumers decide to postpone buying altogether. This will again test the ability of retailers to adequately sense and respond to multi-channel demand volumes and be able to close the sale as more sophisticated consumers exercise all sorts of mobile and online searching tools to find and exercise their holiday buying choices.Intelligence as to what buyers are searching for will ultimately translate to the best product demand and inventory balancing intelligence.

The upcoming 2011 holiday buying season will once again drive home the premise that MCO and responsive supply chain inventory management can often be the best complement to effective multi-channel and online commerce plans.
 

Comments

Bob,
Indeed your comments on the astute shopper for whom we need to keep alternatives ready when favourites run out is quite compelling.

How are you seeing retailers exploit social media and internet for providing intelligence on what customers are searching for? What are the best practices?

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