Forget the Ox, 2021 is the Year of Demand
Tom Summerfield, Retail Director, Peak
The last year in retail has simply been about survival for many, by hook or by crook. However, there remains a lot to be positive about for the year ahead. With the shift to eCommerce taking a hold throughout the year, the results of this year’s Black Friday show interesting trends that retailers may choose to hone in on when planning for the year ahead.
The eCommerce market greatly matured in 2020 and for many, Black Friday can be considered a success. Despite physical retail being shut for the vast majority of November and the Black Friday weekend itself due to a national lockdown, UK retail sales were actually up 3.3% for the month. Whilst overall sales on the weekend itself fell slightly, considering the impact of the pandemic on retail throughout the last year, the results from the Black Friday event were ahead of what predictions stated earlier in the year and therefore provide cause for optimism for 2021.
But whilst there is light at the end of the tunnel, competition for dominance in the new emerging retail landscape will be rife. So, what will 2021 bring exactly? The following predictions highlight some key areas of focus for retailers as well as what the differentiators will be in the year ahead.
Multi-channel will be a big differentiator If there were any retailers not already operating a multi-channel sales system prior to COVID-19, they were always going to lag behind. What we will see next year is an increase in that gap as multi-channel retailers start to leverage more of the data points they’re able to collect in their business. Retail channels have been brought into the spotlight with the boom of eCommerce but the fight is no longer physical stores vs online. The term ‘omni-channel’ has been earmarked as the future but for many retailers the struggle to simply adopt an effective multi-channel approach still exists.
The last year proved that there’s now a maturity curve when it comes to connecting up the parts of a business estate. Accelerated digital transformation plans have helped with this and for multi-channel retailers it provides them an advantage over the pure players due to the rich sources of data that the pure players haven’t got. Retailers who start leveraging those data points from customer transactions and marketing campaigns, will be able to streamline their offerings and work smarter not harder.
The crux of a lot of the digital transformation we’ve seen in previous months has been about delivering convenience for consumers. Convenience has become a huge factor in retail. The checkout on a website for example, has been the main battleground for retailers, offering an assortment of payment options, delivery options, collection options and return options. Being able to deliver true convenience to the consumer, based on their needs, is what many businesses will be forced to get good at this year.
2021 is the ’Year of Demand’ While the forthcoming year may bring about more stability in the retail landscape with greater physical footfall and a maturing eCommerce market, the challenge remains in mapping demand accurately. Retailers will need to focus on casting projections with greater accuracy so that they are able to meet demand with adequate stock while not being left with any depreciating stock if the waves of demand we saw created last year continue. Flexibility and agility are key buzzwords many attempt to adhere to already, but being able to predict demand with great accuracy will provide unparalleled leeway. Being able to predict fluctuating demand provides huge relief in keeping accurate stock levels. The geographical relevance of demand also comes into play much more with increasing online sales. To combat this, many retailers are setting up satellite warehouses and are trying to allocated their stock accordingly to deliver greater convenience to the consumer. To do this better, brands have to optimise what stock is kept where and when, in order to deliver such convenience. In the coming year, a retailer’s allocation and replenishment strategy is going to have a massive impact on any success, so tying up all elements of commerce is vital for retailers. In 2021, we’re going to see retailers of all types getting better at demand forecasting, an essential element of creating a resilient, agile business in the new year.
A connected commerce strategy is essential Having spoken about the importance of demand, the next step to success is in connecting up the supply chain to the demand leavers. This connected commerce vision, where each cog of the commerce machine talks to each other, will help smooth out any disconnect between the sales channels and the supply chain, utilising demand forecasting to operate a slick supply chain system. Imagine if your recommendation engine on your website knew if you had a challenge in the supply chain and reacted accordingly…
Simply put, getting ‘good’ at eCommerce next year isn’t necessarily just doing more eCommerce. You have to ensure it is smart and that happens through channel optimisation. Making sure you are optimising your existing work processes and actions is where your focus should be in the coming year. Driving a unified commerce strategy, streamlining existing channels and linking every part of the system is the top shelf for your 2021 eCommerce strategy.
Alongside this, retailers should also focus on connecting their supply chain up to their marketing and achieve a better synergy between those functions. This will help provide answers to questions such as what are people purchasing more of? And therefore, what do we need to promote more heavily and to which people? You can only do this with the relevant data and here lies the challenge. Mapping and drawing insight from data are time-intensive tasks. How do you fix this and do an amazing job at it? This is where technology like artificial intelligence (AI) comes in to play to automate the process.
Using the power of data and technology There has been a heavy investment this year in digital transformation projects and that will only continue into 2021 with technologies such as AI. Deep technology and utilising data through Data Lake infrastructure is growing slowly, but while the experts see the value, the challenge is to convince CEOs and CFOs that technological innovation is truly making a difference. These are the stakeholders who have helped implement the plumbing behind the scenes but now need to see the output being intelligent and start monetising such a large financial investment. AI is required to come along and unlock value that is in those systems of records, data and processes. Extracting the value from big transformation projects and creating Data Lakes will provide a competitive advantage.
AI applications such as demand forecasting and recommender engines will help to ensure the right stock is available at the right time, for the right customer, supported by intelligent marketing to guide consumers to the products that need shifting in the supply chain. Utilising AI in this way will highlight potential bottlenecks and drive efficiencies that generate financial value.
What do retailers face next? We’ve seen this year that despite all the struggles, consumerism is alive and well. Post-lockdowns people are going shopping straight away, whilst eCommerce sales have grown throughout the year and the added success of the recent Black Friday. All of the above suggests there are opportunities to be taken in 2021. But with increased competition and demands from consumers in a challenging market, convenience will be king.
It is the intersection of customer, product and channel that will prove crucial for brands in the new year. By predicting demand accurately and linking this to other parts of the business machine will help in delivering the customer ultimate convenience. To achieve this, building upon the digital transformation work of the previous year should be high up on the priority list for any retailer, ensuring to utilise data points and tools such as AI to work smarter, not harder. In the early months of 2021, we may see a substantial gap created as the acceleration of businesses who were already able to deploy elements of their digital transformation roadmap last year, start to not just survive but thrive.
This was posted in Bdaily's Members' News section by Peak .
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