Crab Legs for Christmas? Barbies for Boys? How SAP Can Make or Break Holiday Profits for Retailers by Jeremy Stierwalt

Jeremy Stierwalt, Jeremy Thomas Stierwalt, Blog Pic

November 14, 2013

By Jeremy Stierwalt, Service Line Director, Analytics – Optimal Solutions

With Thanksgiving, Black Friday and Cyber Monday just around the corner, retailers are on edge! They increasingly understand this narrow window of sales — historically one of peak shopping — could make or break their annual profits (and their stock price).

The stakes are high and miscalculations can be disastrous. As grocers front load their supply chains, and retailers attempt to predict hot products, those who fail run tremendous risks. In addition, retailers that provide a sub-par shopping experience for consumers must mark down, send back, and eat their losses. In the end, they have to work mightily to regain the trust of dissatisfied customers.

In the past, predictions regarding top seasonal sellers, timely promotions and location- and channel-specific product placements were left to marketing gurus. The gurus tended to draw on faulty or incomplete data, unfounded hunches and crossed fingers. This paradigm has changed.

Now, with an integrated set of SAP solutions powered by the SAP HANA platform, the days of “intuition based” product offerings and promotions are a thing of the past. Solutions such as SAP Sales Analysis for Retail, SAP Net Margin Analysis, SAP mobile solutions, the SAP BusinessObjects BI Platform, and e-commerce solutions from the newly acquired Hybris, provide retailers with an unprecedented opportunity to cash in on the holiday shopping craze.

With data volumes exploding, a shortened selling season, increased competition, and a growing number of tech- and social-savvy consumers shopping online (via PC and mobile devices), successful retail organizations must become adept at extracting maximum value from their data. With hordes of transactional, operational, and unstructured (social) data, retailers need to ensure they offer consumers a consistent, multichannel experience featuring the right products, at the right time, through the right channel. SAP solutions for retail make this possible.

With SAP analytics, BI, mobile solutions and Hybris powered by HANA, retailers can predict and uncover hidden customer, vendor and product trends. They can cement customer loyalty, present a positive multi-channel experience, increase market share, and drive revenues and profitability.

A selection of meaningful business benefits possible with integrated SAP solutions for retail includes:

  • Predictive analytics applied to online search to boost sales.
  • Product selection and promotions informed by real-time analysis of point-of-sale and social media.
  • Promotions and point-of-sale product recommendations that have a higher probability of generating a sale based on analysis of consumer behavior, purchase history, and the performance of different products across specific regions and channels.
  • Optimize real-time promotions based on the consumer’s browsing pattern.
  • Best product, best price, best channel predictions and practices.
  • Lower credit card chargeback rates and reduced shrink (losses) via fraud management.
  • Provide more efficient supply chain processes and inventory management, including streamlined planning and forecasting, sourcing, fulfillment, delivery, and returns.
  • Optimize the use of warehouse space, better use their cash flow, and reduce out-of-stock items.
  • Improved customer service including post-sales service.
  • Accelerate proactive workforce management.

To help bring into clear relief what’s at stake for retailers this shopping season, here’s a snap shop of predictions for this year’s holiday season:

  • Thanksgiving is the fastest-growing shopping day — because retailers are rolling back promotions even earlier than normal. So, instead of launching sales on Black Friday, they’re starting on Thanksgiving. Once this precedent is set, the same will happen in years to come. (Adobe)
  • The average shopper plans to spend about $737 on holiday items, 2% less than the average last year. Overall, sales are expected to rise marginally, by 3.9%. (National Retail Federation)
  • Cyber Monday shopping will be up 15 percent ($2.27 billion), Black Friday will be up 17 percent, and Thanksgiving will shoot up 21 percent. (Adobe)
  • Spending during November and December will total $61.8 billion, up from $53.7 billion in 2012. (eMarketer)
  • The average holiday shopper will spend about $400 during the weekend, up from $365 last year. (National Retail Federation)
  • 44 percent of consumers admit they’ll be swayed by sales and promotions. (Discover Financial Services)
  • Holiday sales will increase 3.9 percent this year to $602.1 billion. (The National Retail Federation)
  • Multichannel shopping will be the norm this year with 84 percent of consumers visiting both traditional and online retailers. (Discover Financial Services)
  • About 51 percent of consumers will turn to smartphone apps for price comparisons and 11 percent say online shopping is superior for price comparison. (Discover Financial Services)
  • This year, online shoppers are expected to spend $1.6 billion on Black Friday alone, up 17 percent from last year. (Adobe)
  • Thanksgiving to Christmas spans only 27 days this year, versus 33 last year, resulting in an estimated loss of $1.5 billion in overall retail sales due to a shortened holiday shopping season. (Adobe)
  • More than half the adult U.S. population, or about 123 million people, plan to shop online from their office or home computers. (National Retail Federation)
  • Among smartphone owners, nearly seven in 10 (68 percent) plan to use their devices for holiday shopping. These consumers will primarily use smartphones to search for store locations (56 percent), check and compare prices (54 percent) and obtain product information (47 percent). (Deloitte)
  • Eight in 10 U.S. online retailers plan to offer promotions. (National Retail Federation)
  • Thirty-nine percent of U.S. consumers who shopped during the four-day Thanksgiving weekend said they intended to make purchases online Monday, up 2 percentage points from 2010. (PriceGrabber.com)
  • Cyber Monday will generate an estimated 11 percent increase in shipments. (FedEx)
  • 36 percent of shoppers said they plan to turn to social media to help make purchasing decisions. (Adobe))
  • 57 percent of American consumers will hit cyber shelves Monday, looking for some holiday finds. (Radium One)
  • 60 percent of consumers will be sharing Cyber Monday info via Facebook while 15 percent will chatter on Twitter. Consumers will look to the social space to find discounts (57 percent), read reviews (51 percent) and find gift ideas (47 percent). (Edward Jones)

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