What will the 2021 retail holiday season look like? The answers seem more ambiguous with each passing day.
Projections early in the year forecasted increases in holiday sales as compared to 2020. However, the ongoing fluctuations in public policy—and public opinion—around the pandemic bring additional variability to already uncertain circumstances.
With so many unknowns in the mix, it’s crucial for retailers to bring stability to their operations wherever possible. To do that successfully, retailers should look to their available data—and ensure that they’re interpreting that data with a discerning eye.
Using retail analytics for the retail holiday season
Retailers are asking big questions about the 2021 holiday season. Inventory, staffing, and digital marketing budgets are just a few of the factors that hinge on a retailer’s ability to accurately predict consumer behavior.
Is store traffic consistently trending downward—either across all segments or certain demographic groups?
Will customers shop online early this season to avoid the in-store crowds and be more socially distant and safe?
Are your best customers prone to COVID-related fears that could keep them from stepping foot in stores this winter?
Will global supply chain disruptions prevent you from maintaining enough inventory to meet the increase in holiday sales?
Questions like these can’t be answered with generalizations. The answers—and subsequent actions that may need to be taken—are closely connected to an individual retailer’s customer base, geographic locations, and supply chain makeup. To determine what the 2021 holiday season will look like, retailers need high-quality data that provides insight into both consumer behavior and their own internal operations.
Most retailers do have access to this type of data: from customer relationship management (CRM) systems, business intelligence and analytics platforms, planning and allocation systems, and inventory management tools. But having access to large volumes of data can be both a blessing and a curse. If the data isn’t interpreted properly, it can be ineffective or even misleading.
There’s still another skill that retailers need to hone to use their data effectively: the ability to distinguish the signal from the noise.
Distinguishing the signal from the noise in retail analytics
The sheer amount of data that many retailers have access to can quickly become overwhelming. Without the right guidance, it’s challenging to know which metrics will move the needle. Those key metrics are the leading indicators for retailers—the “signals” amid the noise. If those leading indicators trend in the right direction, many other variables will fall into place.
Much of the rest of the data that retailers have access to, then, is “noise.” Although the “noise” does have value, these metrics aren’t the main drivers of change.
What happens if retailers get distracted by the noise? Essentially, they’re unable to leverage their data strategically and risk being surprised by problems they could have otherwise foreseen. Retailers may struggle if they tune into the wrong metrics, misinterpret data, or overlook signs of industry disruption. The result is inaccurate decision-making that can have a significant fiscal impact.
Uncertainty is here to stay
While the 2021 retail holiday season remains a bit of an unknown, retailers can expect this type of uncertainty to be ongoing. The pandemic is only the latest (albeit extreme) example of the potential destabilization that retailers face. There will always be emerging signals in the retail space, and it’s up to retailers to develop the agility needed to quickly identify and respond to market conditions.
At Sophelle, we specialize in helping retailers improve and optimize their data to distinguish the signal from the noise. If you’d like to discuss strategies and solutions for your brand, get in touch and a Sophelle Practice Leader will respond to you within one business day.