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Christmas

7 things to plan in September to get Christmas right in grocery retail

Ian Hall, COO, Atheon Analytics shares pragmatic, real-world and data-driven advice to help prevent grocery retailers and suppliers from making avoidable mistakes and missed sales at Christmas...

You don’t have to be a retail expert to foresee an uplift in turkeys, alcohol, and mince pies through December, but in reality almost all products see a dramatic increase 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.

The graph below is a typical annual profile of weekly sales for a supplier that has ‘core grocery’ products (Jan-Dec):

Let’s start by making a key distinction – Christmas products vs seasonally affected products:

  • Christmas-only products are those which are ranged temporarily, and are sometimes even themed (such as dog toys that look like reindeers) – they often come in as a job-lot, depending on shelf-life, and are cleared immediately after Christmas.
  • Seasonally affected lines can have just as big an uplift in sales at this time of year but are ranged all year round (e.g. Stilton cheese). Almost all lines in a store are seasonally affected in some way at Christmas.

For Christmas-only products, there are limits to what you can do at this time of year, and seasonal product forecasts tend to be self-fulfilling i.e. with products sourced from the Far East, the volumes are typically agreed in March, shipped through the summer, into retailer depot in September, and in store at the start of October (much to general public outcry!).

Everything that is shipped to the retailer gets sold (sometimes on markdown post-Christmas), and best sellers can run out early – unless you are Mystic Meg you will have either guessed at (sorry, ‘forecast’) too much volume, or too little. The balance for the supplier is to avoid missing sales by supplying too little versus getting hammered for markdown rebates in January when the excess stock is cleared at a fraction of the RRP.

All other 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

But of course, it’s a bit more complicated than that.

There are some subtle trends to be aware of:

  • The “mother-in-law effect” – most consumers trade up to more premium products in December. Nobody quite knows why – maybe it’s because you have more visitors, or want to impress the in-laws, but people buy more quilted toilet rolls and branded washing up liquid
  • The shopper is not always the consumer – of vital importance all year round, but amplified at Christmas; for example, most beer is purchased by women but consumed by men. Take this one step further when you consider pet food, and further still when you realise that people buy gifts for friends with dogs and cats! So whilst you might not have thought about it, sales of dog toys rise disproportionately in December (and not just on Christmas-only lines – even things like tennis balls may quadruple in sales). Just because dogs don’t eat more in December does not mean that pet food is a static category from a sales perspective!
  • Weather makes a difference – a cold snap will lead to panic-buying (even things like dishwasher salt and cat-litter to clear snow!)
  • Christmas Day falls on different days of the week – it is really important to know which day Christmas falls on (yes, I know it’s December 25th, but which day of the week is that?). Christmas is a Wednesday this year; that probably means that people will be doing their ‘big shop’ on the preceding weekend (Friday/Saturday/Sunday). Very few people leave their main shop until Christmas Eve but, equally, if Christmas falls on a Friday not many people are going to buy their sprouts and double cream 5 days before. This has a big effect on the last few days of sales, and is extremely important for suppliers of short-life products. In 2017 the peak trading day was Friday 22nd – this will probably extend to Saturday 21st this year
  • Depots have fixed capacity – retailer depots will be bursting at the seams, and booking slots are limited, so you need to be precise with delivery planning and highly reactive to traffic challenges – get on the front foot and talk to your retailer customers in advance
  • Planning and forecasting varies by category – some categories are harder than others to get right. Some can be forecast at the category level, for example if products can be easily substituted, and are impulse purchases, such as dog toys – if one toy runs out, chances are that the shopper will buy a different one. In other categories, forecasting only makes sense at SKU level – if you run out of sprouts, people won’t simply buy broccoli as a substitute, and I for one would be dismayed to be offered Dairylea with my glass of port just because the shop was out of Stilton
  • Waste and Availability remains a delicate balance – the age-old balance between availability and wastage is never more important than at Christmas. You don’t want to run out of stock and lose sales to competitors at this key trading time, but excess stock will turn into waste in the days after Christmas, or 7 days, 21 days, 30 days later, depending on shelf-life

So what – what can you do with this insight?

  1. Monitor sales daily – it is no good reviewing on a weekly basis and not being able to react in time
  2. 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!
  3. 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
  4. Monitor (depot and store) stock not just sales – you cannot react quickly enough to sales in late December, so track stock levels and use these to predict potential availability and waste issues
  5. Manage stock run-down on seasonal and short-life SKUs – remember those days after Christmas when the stores will be closed, and nobody is shopping
  6. Plan replenishment and ‘business as usual’ trading for early January – unless you sell Weightwatchers products or Baileys
  7. Analyse your data to win more business – analysis in January is the best way to predict order volumes for next year, and the earlier you do this, the more effectively you can begin to collaborate with the retailers

5 retailer tips for low cost product videos and ‘how to’ videos

By Jonathan Booth, The Internet Video Company

With customer engagement now so key in attracting, converting and retaining consumers, low cost video is playing a key part by offering a vital, and very powerful medium with which to communicate with them. Watch here.

People want to watch video – it’s easier than reading, more info, excitement and inspiration can be packed into the 30 seconds they allow you than any other medium, and they are so familiar with consuming video in every other aspect of their lives.  Watch here.

Online, Product Videos and How To Videos are now essential – to showcase products and services in the way consumers want, and to offer personally-delivered ‘real’ How To and advice, and to bring the in store experience to the online store, so customers can more realistically rehearse the buying decision, and the brand can shorten it.

In store, video adds movement, excitement, consistency of brand and advice, and a hugely powerful tool for store colleagues to improve their ability to impart knowledge, and most importantly to sell both store SKUs and wider web stock.

But how to get the great videos you need –  and at a low enough cost to deliver best ROI?

Here are 5 great Tips: Watch here

  1. STORY
    Make sure you really engage your viewer. Hook them, inform them, inspire them, make them lean forward and feel how you can improve their life – even a little bit!
  2. STYLE
    Choose a feel that’s right for your brand, but keep it light, conversational, no nonsense – remember, video should be like a word-of-mouth recommendation from a mate.
  3. SNACK
    It’s got to be digestible, and that (usually) means short! Studies are showing that shorter means more effective, so distill, hone, cut, edit and whisk until the main message is light and tasty – you can always put a list of more detailed benefits at the end.
  4. SEE
    They can’t watch it if they don’t know it’s there! Visitors aren’t always expecting you to have a video, so you have to shout a bit – not a tiny little unclear button tucked away lower down, but a nice big red PLAY button, over your hero image, like YouTube’s.
  5. SHARE
    It’s also no good having video unless you share it – not just on your product page, but on every social outlet you use, plus emailouts, in store, QR codes on packaging – everywhere.

And finally……

It CAN be done at Low Cost!

Product films and How Tos can be made at surprisingly low cost. Your advertising agency often won’t want to do them, because it’s hard to do well at low cost, but it’s absolutely possible if you work smart. And then it becomes affordable for hundreds or even thousands of SKUs to each have their own powerful selling video.  And to make useful How To and Advice videos to enhance brand loyalty.

Jonathan Booth is an expert in video and audio creation for retail, both in store and online. As MD of The Internet Video Company, he’s created thousands of films and audio pieces for major brands like Aldi, Harveys, Bensons, Konica Minolta, Draper Tools, Cuisinart and more.  He knows what engages customers and inspires them to purchase and remain loyal, whether it’s product videos, how to videos, lifestyle films and so on.

Contact Jonathan at 01962 736666 or jb@theIVC.com.