The Golden Quarter: Planning for profit with intelligent merchandising
16th September 2022 | 5 min read
Retail Express’ UKI General Manager, Ed Betts, explains how AI-driven retail management can help retailers navigate the busiest shopping period in a year of unprecedented challenges.
16 September marks the 100-day countdown to Christmas, also known as the Golden Quarter; the busiest period in the retail calendar. The Golden Quarter can be a difficult time for retail businesses, but this year, of all years, will be a real challenge. The cost-of-living crisis continued disruption to supply chains, the effect on global trade and freight costs as a result of the rising dollar[1], as well as strike action affecting ports and transport links, will all have a significant impact on the retailers’ ability to do business.
Retailers simply must get it right this winter. And as the Golden Quarter brings Halloween, Guy Fawkes Night, Black Friday, Cyber Monday and Christmas in very quick succession, the main commercial challenge is how to deliver truly incremental growth. Retail businesses need to be able to enter and exit the quarter’s various events cleanly, maintaining the extremely difficult balance between ensuring timely stock availability and avoiding excess inventory after each event.
With pressure building to finalise plans and start generating results it can be easy for buyers to rely on the same promotions time and again for ease. This can be precarious as outcomes are likely to be at best the same as in previous years or, due to the current financial climate, far worse. For retail businesses to not only keep their heads above water, but also achieve a profitable final quarter at such a frenetic time, they must possess impeccable retail skills, be able to foster great relationships with suppliers and other key stakeholders, and employ an extremely sophisticated system of forecasting, ordering and replenishment.
Category management is key
If it’s not on the shelf you can’t sell it. Retailers know all too well the importance of timely stock ordering at times when its most in demand. But it’s easy to see why, as pressure mounts, errors can be made and key lines can be ignored or miscalculated in the rush to turn a profit. Retailers also need to be mindful that, for example in the week before Christmas, the profile of purchasing changes as customers switch from regular grocery items and turn to ancillary items for the festive period.
The ability to build accurate and detailed records is therefore critical, reflecting a range of product categories as well as deals, promotions and advertisements, all tied in to related seasonal events. Yet, time and again, such is the onerous effort of this task that retailers revert to a tried and tested approach to reduce risk. This only hinders, rather than helps, the retailer’s cause. Retailers are then tempted to boost waning sales with quick-fire offers, but this can lead to major problems without proper forecasting.
‘Stunt’ offers, for example, – employing a sudden price drop or deep-discounting in an attempt to drive instant sales – can take the business plan sharply off-course while creating wider issues when the promotion performs above or below forecast. This will impact the sales mix and result in additional pressures. Changes in sales plans to address performance at this point in the quarter have to be carefully managed to avoid knock-on implications affecting price establishment periods, stock levels and any advertising that has already been agreed.
Digital transformation: A new era of algorithmic retailing
This is where intelligent merchandising comes in, helping retailers coordinate their efforts and ultimately stay ahead in an increasingly competitive marketplace by harnessing the capabilities of artificial intelligence (AI). Intelligent merchandising software replaces a chaotic mix of emails, phone calls and spreadsheets with powerful planning tools and AI-driven insights which can help retail businesses rethink their objectives, while gaining some breathing space instead of being burdened by time-consuming admin. Execution on the back of high-quality planning is the key to getting retail right, improving partner and supplier relationships and ensuring a unified approach.
Utilising intelligent merchandising software to simulate plans prior to releasing to the market can offer a more holistic view of planning and performance across the whole Golden Quarter period. Here algorithmic retailing, the use of AI to drive automation and recommendation systems, can free up staff time whilst still allowing them to retain control. Time spent improving retailer and supplier collaboration with better negotiation capabilities and improved forecasting will help the retailer present a solid front in the face of ruthless seasonal competition. Maintaining a centralised planning platform provides one version of the truth, replacing siloed approaches and conflicting practices with a singular and transparent plan that everyone can get behind to become the definitive mode of operation.
Boosting profits in the Golden Quarter and beyond
Retailers can now make use of new levels of visibility and insight previously out of reach. For example, by using AI to analyse current and historic data with the trading and merchandising conditions that underpinned those sales, accurate predictions can be made about how pricing and promotional plans will impact future revenue and profits at both summary and granular levels. This has obvious merit both during the Golden Quarter and beyond. Previously such intelligence could only be gained from implementing a plan and waiting to see its effect. Yet at a time of year when the stakes are so high, the modern retailer can no longer afford to rely on such a method of trial and error.
Forward-thinking retail businesses are acting quickly to take advantage of intelligent merchandising solutions, delivered on a Software as-a-Service (SaaS) basis, that will allow them to escape the limitations of legacy operations and embrace technology that’s been designed to facilitate growth. With renewed ability to improve pricing; promotional planning and execution; media planning; and collaboration with suppliers, improved vendor funding can be accessed. By embracing digital transformation and taking the steps to vastly improve key processes, a well-coordinated, more profitable Golden Quarter lies ahead.
[1] https://theconversation.com/five-ways-that-the-super-strong-us-dollar-could-hurt-the-world-economy-186654
