Black Friday: How can algorithmic retailing ensure a successful event?
Ed Betts, General Manager Retail Lead Europe, Retail Express
Worldwide activity surrounding Black Friday has never been stronger. Over 53% of US consumers plan to make a purchase while UK consumers are expected to spend £8.71 billion over the 2022 Black Friday weekend. It’s an event which represents a huge opportunity to drive up customer numbers and generate sales. But first must come real, tangible deals.
Consumers, operating on a tighter budget in a difficult economic climate, look to Black Friday to get the absolute best price. This means a disingenuous deal may lead to disappointment and harm a retailer’s reputation as a result. Retailers must, therefore, find the right formula for success.
The power of the perfect price
Consumer group Which? recently revealed that analysis of more than 200 offers last Black Friday found 98% were cheaper or the same price at other times in the year. Savvy consumers follow brand pricing, but slashing prices too far will have a negative impact on an already difficult bottom line. Finding a balance is crucial, particularly when retailers must also work within the rules.
Price establishment regulations affect the way discounts can be marketed. The optimal Black Friday line-up is one in which as many items as possible have previously held an established price and can have their discounts advertised. This is often difficult and time consuming to track – and cutting prices on Black Friday may then impact negatively on Christmas and New Year sales without proper planning.
Marketing means money
Selecting which true big-ticket items (or even clearance stock) to promote during what is an extremely time-limited event is critical both to generate sufficient attention and to avoid losing out on future sales opportunities. Discounts must also be made while being cognizant of their effect on other core lines; there is no sense in cannibalising future sales for the sake of attracting a weekend’s worth of low-margin traffic.
And then there’s communication. Getting Black Friday marketing right is about hype: consumers need to be excited and feel a sense of urgency. Internal communication, too, is paramount. Last-minute changes can be highly disruptive and poorly planned deals or forecasting errors can cause a chain of issues. Every business needs to approach a time like Black Friday as a united entity – something which isn’t always easy to achieve.
Planning makes perfect
Successfully navigating Black Friday means putting impeccable plans in place with consideration for other sales periods over the year. It means having enough stock, pricing it appropriately, communicating plans with suppliers and partners, and keeping other lines in mind. Retailers need to know which margins they can successfully dilute, and which need to be left alone. This can be a huge logistical challenge, but there is a solution.
Intelligent merchandising (also known as algorithmic retailing) employs centralised data management and artificial intelligence (AI) tools to help manage ranges, plan promotions and, crucially, generate accurate forecasts of promotions’ sales performance and their impact on other lines. Applying algorithmic models to data creates the potential for advanced planning and logistics with one version of the truth helping departments align products and prices for every key discount period without spoiling future sales potential or falling foul of pricing regulations.
The potential of data
Clear data and algorithmic models make forward planning straightforward. Internal and external communications can be lined up early and accurately, all while maintaining tight stock control. Conversely, good data means retailers can afford to act without prior planning: access to AI models enables quick, reactive discounts which can increase the impact of events or clear stock effectively.
Making a swift digital transformation is crucial for every retailer because strong data management is the path to profitability. Embracing the latest technology and the intelligent, bespoke software which powers it is the key to delivering truly incremental sales. Algorithmic data models remove the need for forensic analysis of the books. It smooths every process from the supply chain to the shop floor – and offers a strong analgesic against potential pain points like Black Friday.
To learn more visit: https://www.retailexpress.com/