The numbers are in and the results are clear. Retailers enjoyed a very good holiday season. Not only was U.S. retail spending up 4.9 percent over the previous year, but a new tax law promises to leave both businesses and many consumers with more money to spend in 2018. The critical question for retailers now is this: How can they capitalize on this changed landscape when the next holiday season rolls around in November?
The answer, according to Steve Dennis, a leading retail consultant, blogger, and former executive at Neiman Marcus and Sears, is a mixture of traditional tactics and investment in new technologies. That’s why retail analysts are forecasting increased experimentation with new tech tools in 2018.
With an eye on making the most of the next holiday season, Dennis breaks down how smart retailers are already using technology to drive sales.
The future of retail: how to maximize margins in 2018
1. Better preparation with data science and AI
“The more data you have, the better able you are to do just about anything. I think if you understand customer behavior and customer profitability, there’s certainly an ability to better maximize your margins.
Looking forward, artificial intelligence is going to inform how any brand is going to evolve its customer experience—both from a personalized marketing standpoint as well as how to make assortments more relevant.”
2. Build a smarter supply chain
“The better you can predict demand by ultimate distribution point, the better you can actually buy and package the product. If you get that out of balance then that causes some problems. Either more markdowns or risk of being out of stock. As science gets better your inventory flow and some of your specific decisions can be better optimized.”
3. Offer data-driven discounts
“If you really understand your customers you don’t do one-size-fits-all promotions very often because you would understand that there are plenty of people that would buy without a 20 percent discount. And there’s plenty of people for whom 20 percent is not enough of a discount.
There’s a lot of money, in theory, that can be made by investing in data science and targeting your marketing for greater return on investment.”
4. Line breaking with mobile point of sale systems
“This certainly helps deal with the crush of people. But sometimes there’s more of a psychological benefit to customers. Like with drive-in fast food, it doesn’t actually speed up the time it takes you to get your food, but it speeds up the time it takes you to place your order so you feel like it is going faster.”
5. Order online, pick up in store
“Customers often would come to the store to pick up their order, and they’d buy stuff that they weren’t planning to. So it can be a good incremental traffic-driver and can grow transaction value. And lots of retailers are figuring out that this is just what you have to do to stay competitive.
Moving forward, I think you will see a lot more curbside pick-up or drive-throughs. That’s fundamentally changed the store design of pharmacies, for example. The same thing for fast food restaurants years ago. I think we’ll see over time that retailers will rethink not only the interiors of their stores, but their store exteriors to be able to facilitate more convenient pick-up and return of product.”
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Source: Network News