Ian Hall, COO at Atheon Analytics, provider of the SKUtrak platform, shares 3 things to plan now, to maximise Christmas sales in grocery retail.
None of us foresaw COVID, and the impact it would have on panic buying. It feels like a lifetime ago that the shelves had no toilet roll and pasta. But you don’t have to be a retail expert to foresee an uplift in turkeys, alcohol, and mince pies this December. That said, almost all products will see a dramatic increase in sales leading up to Christmas - simply put, people buy more of (almost) everything.
The week leading up to Christmas is by far the biggest sales week of the year for almost all suppliers (unless you are in the Valentines or Easter egg business), but an often overlooked fact is that the week after Christmas normally sees the lowest sales of the year. Fresh suppliers, in particular, need to consider the impact on waste and replenishment orders that comes from people having plenty of food in, living off turkey sandwiches for 7 days, and shops that are barely open.
Most products in store will be affected, to a greater or lesser degree, by the general uplift in sales; but why does this matter if stores order more every time they sell one? Three important reasons:
- If suppliers don’t forecast accurately they may not be able to produce enough to replenish orders
- Depots are incredibly busy through December - it is not always easy to get delivery slots (if you supply washing powder you are going to be de-prioritised vs Christmas crackers and mince pies)
- Most of the sales uplift occurs in the 7 days leading up to Christmas - by the time products are replenished, it’s over
We would probably all recognise these typical Christmas shopper habits:
- 4 weeks to Christmas - we load up the cupboards
- 1 week to go - buy all the fresh stuff, and impulse/distress purchases
- 1 week after Christmas - we live on turkey sandwiches, and the shops are not open for normal trading hours
- January - everyone renews their gym memberships, has some vague thoughts about ‘dry-January’, and lives off soup and slim-fast
The big unknown this year, is can we even visit relatives during a 2nd lockdown. Will we all be having smaller than usual family gatherings and Christmas celebrations? If so, retailers should plan to sell a higher volume of baskets at a lower average value.
So what - what should you be doing now to get Christmas right?
- Collaborate with your retailer now - share your forecasts for December, and share analysis from last year - poor availability can be eliminated with better forecasts, but time and time again we see suppliers losing sales in December because their lead times do not allow them to react quickly to sales that could easily have been anticipated. Get the stock through the depots and allocated to store ahead of the sales spike!
- Use detailed historic data to forecast - blend sales and availability information to get the best picture you can of true demand. Where appropriate, ensure that you forecast at SKU, not category level; Stilton and Brie do not behave the same as the cheese category in general
- Plan replenishment and ‘business as usual’ trading for early January