Retailers to adapt to fulfil consumers Christmas needs

Christmas 2014 is gearing up to become a “lucky dip” for UK retailers, as they prepare to fight against uncertain consumer spending, promotion fatigue, multi-channel fulfilment and weather issues.

According to a new report from retail analysts Conlumino and SAS, entitled “Christmas 2014 Adapting to Evolving Consumer Shopping Habits,” there is a growing disconnect between consumers and retailers which needs to be adjusted to guarantee a successful holiday trading period.

Research found that the total spending for Christmas 2014 will be similar to 2013, with 30 percent of consumers revealing they feel worse off than last year. The gap between retailer and consumer understanding is reflected in the reports findings. This Christmas is predicted to see the “biggest demand for multi-channel fulfilment experience,” with more and more shoppers turning to different channels in order to shop.

Report highlight growing disconnect between consumer and retailer for Christmas 2014

As traditional shopping patterns continue to change, more consumers turn to new shopping services, such as 'click & collect.' Over half of UK's consumers intend to use 'click & collect' services, with almost three in four aiming to return unwanted purchases in-store, becoming what is known as 'return & run.'

The report also found that 60 percent of consumers plan to carry out last minute shopping trips on the weekend before Christmas, but only 28 percent of shoppers state they are prepared to do this. In comparison, 60 percent of retailers believe that shoppers aim to do a “bulk shop” on the last weekend before Christmas, despite only 28 percent of consumers are prepared to do it.

However most UK retailers have not factored these situations into their forecasting and planning for the holiday season, demand planning and overall customers experience. 44 percent of UK retailers say they still rely on gut feelings for forecasting demand and nearly half (47 percent) rely on manual calculations. 47 percent of retailers admit to promoting the same goods each year.

“These out-dates approaches lead to risky, unplanned price wars to win customers back and can expose the business to long-term harm,” warns the report. “Retailers therefore need an up-to-date picture of what their customers want and the ability to adapt the service offering according to these preferences.”

“Retailers are facing major changes in how consumers shop at Christmas. They require more options for purchase and fulfilment, and more personalised offers to break through the inbox deluge all consumers experience at this time of year. UK retailers need to get more sophisticated in their forecasting, demand planning, and customer experience in order to meet the changing requirements, otherwise 2015 will be a long year for many retailers,” commented Maureen Hinton, global research director at Conlumino.

"UK retailers need to get more sophisticated in their forecasting"

“So while we see game consoles, books, DVDs, clothes and chocolate as firm favourites this year, any change in demand, need to be planned so retailers can respond rapidly with personalised promotions and offers to attract and keep customers. It will be interesting to see what innovations retailers have in 2014, because they will need it to keep the sales flowing.”

The two main groups with the most festive optimism are the Londoners and the 18-24 year old, who expect to spend more this Christmas than last year. But spending forecast among the 35-54 year old is quite negative, for both men and women, another issue many UK retailers seem to lack a deeper understanding of the different consumer segments and their various reactions to holiday promotional offers.

Adverse weather conditions have also significantly impacted trading during the holiday season over the last few years, with 50 percent of retailers reporting a high to medium influence of poor weather affecting sales figures, versus 16 percent of consumers believing it had an impact. With consumers expecting to receive their online order or purchases despite of any ailing weather conditions, retailers need to respond to any weather issues.

“The retail landscape has never been more complex...to compete, retailers need to compete in the now, by harnessing their data and external sources – such as weather forecasts– to better model and predict consumer demand in order to meet the needs of the customer,” adds Andrew Fowkes, Head of Retail Centre of Excellence, SAS UK & Ireland.

“Consumers live in a society now driven by immediacy, and retailers have no option but to get in sync. So whether it is the known unknowns, or the unknown unknowns, big data analytics provides retailers with the ability to predict the possible and meet consumer demand.”