Patterns are unpredictable
Latest buying report reveals faster responses matter now
PREDICTION and pattern are going out of the window in retail as the latest Seasonal Buying Report from i2i Events reveals faster responses, closer to the season are what matters now.
The report from the organisers of Spring Fair and Autumn Fair has been released this week and comes from their Inside Retail survey of retailers in the home and gift sectors – from independents through to multiples and department stores.
Louise Young, i2i Events Group MD Retail, said: “Today’s world is characterised by enormous change and much of that change is being driven by consumers. Consumers have been affected by economic conditions and then even more profoundly by the digital revolution.
“The changing consumer is leading to a change in the way buyers have to think about meeting their needs. Traditional buying seasons and patterns can no longer be set rigidly by the calendar only.
“It’s impossible to know how customers will be feeling and spending in 12 or even six months’ time so where is the logic in committing vital budget that far ahead?
“Luckily, suppliers have responded to this new market and are being more reactive and agile in meeting short-term demand.”
For the report, i2i asked retailers’ views on the best way to serve their customers and plan for key seasonal promotions and events, as well as the changing buying landscape.
The report, which is available from the Autumn Fair website, includes a number of charts illustrating the retailers’ responses to questions, showing that 65 per cent say Christmas is their most important sales period, with a further 14 per cent saying it is also important.
Three per cent said Black Friday was also important, with 17 per cent saying the school summer holidays were their most important sales period.
Twenty per cent of respondents said 40 per cent of their sales are generated in the run-up to Christmas, with a further 27 per cent taking 30 per cent of their annual sales in the period.
The report states: “We are witnessing a retail revolution – customers are behaving differently and believe they are empowered to shop wherever and whenever they what, They are no longer being dictated to by retailers curating collections put together by their buyers.
“Driving this change is the digital revolution and mobile in particular which is giving consumers the power to control their shopping habits and destinations.
“What the survey results show is that the majority of retailers confirm that it is now harder to predict their customers’ behaviour and spending habits. Traditional buying seasons make less commercial sense when the real requirement is for retailers to be able to respond faster and closer to the season.
“Christmas remains the dominant season, of course, but even this most important and predictable season is being changed with the rise of pre-Christmas sales and discounting, and then, in 2014, the arrival with a big bang of Black Friday which succeeded in catching consumers’ imagination and wallets – but at enormous cost to retail markings and demand patterns. “Retail buyers are more and more inclined to buy stock frequently and reactively throughout the year.”
One respondent told i2i Events: “There is almost no point in trying to predict anything, as it’s next to impossible to work out much of a pattern.”
The results show 49 per cent said that it is now difficult or very difficult to predict how their customers will spend over the next 12 months, and 40 per cent of respondents spent more than half their annual budget closer to the season rather than planning further in advance as they had previously.
Compared with three years ago, 27 per cent of retailers said they had reduced their forward ordering with customers’ constant demand for new products being the main reason – and 70 per cent agreed supplies have made it easier to stagger buying across the year.
Black Friday was also a key question, as the 2014 event saw £810million spent on the day across the UK, although just nine per cent of respondents said they participated, of whom 62 per cent said their promotions were successful and 56 per cent said they will definitely or probably take part this year.
The report states: “The fallout from this was that it disrupted the build-up to Christmas trade for many retailers and they have learnt the lessons on how to mange the discounts and their margins.”
The report also contains pieces by leading ecommerce expert Martin Newman, who looks at how the online channel is reshaping consumer demand and spending patterns, and retail marketing expert Stella Hartley, who sets out the key rules for understanding data and trends.
Martin concluded: “In simple terms, maybe it’s time to change our buying and merchandising habits and move away from the traditional AW and SS season buying cycle.
“Maybe it’s time we look to spread out our stock, take sales and demand data from all our channels into account and ensure we are stocked for new events which drive customers to our stores.”
And Stella said: “Agility is the new buzzword. The internet has made everything more transparent and faster, it gives more viability to small brands with niche offers, giving customers more choice more easily accessible than ever before.
“This means that retailers have to adopt a more flexible and speedy buying model and be more agile to compete.
“Most retailers talk about ‘buying closer to the season’. However, it’s also about more frequent drops of new stock throughout the season to satisfy customers who not only shop in stores but also on their sofas, on the train, or at work, and want to see something different every week.
“One solution is to be more reactive, reduce supply time and buy closer to home, accepting pressure on margin as the trade-off for agility.”