Whilst Tesco’s headline-grabbing Big Price Drop signals a move towards low pricing in a broad range of individual products and fewer multi-buys, promotions remain a major feature of UK retailing.
In a sluggish economy, customers are increasingly shopping around to save money and buying key items such as washing powder only when they are on promotion.
But how can retailers use technology to help ensure that special offers will not have a derogatory effect on their business?
The planning process
Retailers need to be able to plan promotions and understand the impact across the entire retail chain – obvious really, but what that means is that planning cannot be an Excel-based process. It affects too many other areas of the business.
Technology helps in pricing – allowing retailers to sniff out what price their competitors are using on a daily basis and can be used as the basis of price optimisation solutions which can be used to assess what the best price point is likely to be, in relation to the price of the competition.
Similarly, technology helps in the negotiation of the promotion with suppliers, allowing the simulation of different pricing and merchandising scenarios for both online and off-line channels and the halo and cannibalisation effect of promotions on other products.
A demand-based forecasting solution also allows for the accurate simulation of warehousing and transportation operations, to ensure that the retailer’s supply chain can cope with the volume uplift.
Finally, technology can help retailers determine what additional work is required to be performed in the store to enable the promotion, for example removing the old product, changing the shelving, stacking the promotion, putting up signage, etc, and to evaluate this against store hours, before a final decision on the promotion and planning change takes place.
The execution process
Once the decision to run with a promotion has been made, then technology enables the execution of that promotion, from placing an order with a supplier to placing product on the shelf.
From the raising of an electronic purchase order, through to the production of an advanced shipping notice by the vendor, the allocation of a delivery slot at the warehouse, the co-picking of the correct product and promotional materials and the delivery of that product on vehicles whose route and load have been optimised to save fuel and space, supply chain execution systems aid the flow of product from point of origin to point of consumption.
Workforce management technology then ensures that the in-store work element has been planned and scheduled for an individual to perform. Task management technology then allows compliance with work instructions to be accurately monitored and reported back to local, regional and central management.
Technology supports the execution of the promotion from cradle to grave, ensuring the right products are put on the right shelves in the right place, and the right people construct and run the promotion in-store so that it maximises the opportunity to make more money out of the campaign than it costs.
The review process
Technology also supports the review of the effectiveness of the promotion. Business intelligence solutions collect together all of the planned actions and compare them to what actually happened – allowing retailers to learn from the difference between what was planned, including the sales result, and the actual. If a promotion failed to deliver the planned result, this allows the retailer to determine whether this was down to a poor plan or poor execution of that plan and to incorporate this learning into their future promotion planning.
In some cases, the planning process can be re-simulated with the actual results and not the planned results to see where things went wrong.
Technology can also be used to obtain feedback from stores which, again, can be used to inform the planning of future promotions.
The all-channel challenge
The explosion in e-commerce and increasingly, mobile and social shopping, has a significant impact on retailers’ operations and technology strategies – today’s consumer seamlessly moves from a retailer’s store to its website to its mobile site, without differentiating between channels, so suppliers and retailers must also provide a consistent consumer experience across these channels.
Customers will shop in stores one day and online the next without a second thought and retailers need to appreciate this and build it into their plans, for example, by offering discounts online that are redeemable in all channels.
Making sure marketing and branding strategies are integrated with back-end business process technologies is also crucial. Companies must have a technology platform that allows them to engage customers in these new and emerging channels, and must be able to integrate these channels with existing ones. After all, using mobile apps and social shopping to drive traffic – and hopefully sales – to store, online or mobile commerce sites is useless if the retailer cannot deliver from a customer service and stock availability perspective.
Technology has a pivotal role to play in the planning, execution and evaluation of promotional activity, both in store and across new channels and devices. Successful promotions rely on connecting all of these areas of technology together.
Note: The views expressed here are those of John Bailey and do not necessarily represent the views of Retail Gazette.