How major retailers should handle early holiday 2023 demand

holiday shopper
Holiday shoppers are starting early.

Retailers are anxious to get an early start on the holiday season and drive high demand.

But there will be challenges to overcome. Half of consumers recently surveyed by eMarketer plan on starting their holiday shopping before November, and with consumer demand flagging this summer, gaining an advantage will be a challenge.

Rolling out early promotions, as we see with online and back to school sales, should be part of the strategy, but it will take more than heavy discounts to separate from the pack. Retailers have to get the most out of their resources and processes, optimizing inventory management, supply chain operations, and workforce, in order to get an edge.

Keeping a close eye on inventory 

Two years ago, near the peak of the pandemic, consumer demand was at or near its peak with online sales surging and product inventory lagging. Last year, to compensate during the holiday season, retailers overstocked their inventory, creating a major backlog of products once the season ended. 

Gleaning lessons from the feast-famine period of the last couple of years, retailers are likely to take a more conservative approach ahead of this holiday season. Striking the right balance between too much and too little is difficult, especially given how mercurial the U.S. consumer has been this year, but maintaining a current view of inventory will be critical.

With inventory management being critical to the bottom line of retailers, AI and IoT gain in importance as they look to help optimize inventory management. Powered by reliable connectivity solutions, IoT sensors can be utilized to connect their supply chain to their network, providing a more accurate real-time view of their inventory.

Additionally, AI can enhance predictive analytics to anticipate backlogs and gaps, enabling retailers to be more proactive about managing their inventory levels. 

Optimizing supply chain operations 

As mentioned in the previous section, real-time inventory tracking, enabled by RFID technology and IoT devices, will be critical to optimizing supply chain operations. Retailers will have to ensure they have sufficient inventory to meet increasing holiday demand without ending up with too much of a surplus – a perennial challenge for retail, to be sure, but one whose stakes are raised in the face of such a dynamic economic environment.

The reality is the supply chain is still in flux. The pandemic exposed some of its weaknesses, including that it was stretched too far and too thin. Couple that with changing consumer behavior and even more demand for immediate gratification, and the challenge retailers face crystallizes.

Another area that can provide a boost is item-level tracking, which gives retailers a view of specific items in specific locations in-store. Being able to closely manage inventory in-store and across the supply chain will be a difference-maker this year.

Seamlessness as customer experience

With a renewed sense of purpose on driving customers in store post pandemic, retailers are pulling out all the stops to craft an unforgettable, frictionless experience. 

This is why – in addition to the ongoing labor challenge – retailers are investing in technology that will boost associate productivity in providing personalized customer experiences and make it easier for consumers to purchase without interacting with associates, for those that prefer an independent approach. 

Retailers must prioritize optimal staffing levels throughout the holiday season and ensure they properly anticipate early season spikes in demand.  Luckily, there are advanced AI tools now available to streamline the process.

AR and VR can be used for video training, which is especially effective with temporary and seasonal workers, to improve staff efficiencies as retailers ramp up for the holiday season.

Smart and aggressive 

The opportunities are there for retailers this holiday season, but an uncertain economic climate and unpredictable consumer demand requires a more calculated approach.

They must start earlier, yes, but they should make sure the processes and systems in place will allow them to manage resources, while maintaining efficiencies for demand effectively. With the support of technologies available today, retailers should already have these  processes in place to ensure a smooth shopping experience for customers.

As always, and especially during the holiday season, every customer interaction is an opportunity to delight new and loyal customers. Your first impression could win customers over or be your last impression.


 

 

 

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