Guest Blog by Doug Pasquale
The holiday season can never be too long for retailers, but this year presents a unique challenge – only 25 days will be between Black Friday and Christmas to capture peak holiday spending, and every day counts. This critical time can account for 20 to 40 percent of a retailer’s annual sales activity, so it’s no surprise that companies have debuted holiday displays, discounts and ads as early as September in an attempt to make the most out of this key period. The loss of time is even more critical for electronics retailers, who are already hard pressed to deliver on exorbitant levels of demand generated on the heels of recent major smartphone, tablet and wearable technology launches such as the iPhone 5s, the Nike + Sportwatch GPS, and the Samsung Galaxy Note. Retailers need to explore other avenues to surpass their competition and meet consumer demand.
It’s Not Just September Ads and Tree Displays
Morgan Stanley found that shopping malls featured 20 percent more promotions in the third quarter 2013 than the same quarter last year. However, retailers should consider whether there is a better way to compete during the holidays besides breaking out the ornaments and trees before Halloween candy hits the shelves. Those retailers who operate lean and agile supply chains are better able to keep a pulse on swings in demand, deliver goods quickly regardless of the purchasing channel and ensure product availability. By virtue of a shorter peak season, these advantages become critical game-changers.
Embrace a New Supply-Chain Plan
An effective supply-chain execution can mean the difference between delivering products to consumers or losing their business. While changing operations strategies before the holidays may seem ill-advised, the peak season’s distinctive set of logistical circumstances, delivering and stocking requires a unique strategy. The peak season operations strategy should be tailored to accommodate the higher-than-normal spikes in demand, meaning that back-end and front-end operations must run seamlessly. Retailers should spend time forecasting and planning ahead for supply shortages and expedited shipments and should work with logistics service providers that can help execute the plan. This is especially true for electronics retailers who will be relying on the delivery of many of their products from overseas during a time when ports are notoriously crowded and recent product hype has caused sky-high demand.
Pay It Forward
Adopting a reverse logistics strategy is another particularly useful method to differentiate a company from the competition and to better serve customers during the peak season. Retailers across all industries should take a page from the electronics industry for best practices in creating and running reverse logistics programs. For example, a Best Buy program has recycled 829 million pounds of electronic goods to date. Aside from the obvious environmental benefits, reverse logistics programs can help retailers reclaim and reinvest some of the value of the product that would have otherwise been lost to a landfill. Additionally, consumers receive the benefit of either trading in an old or damaged product for cash or store credit that can be used to purchase a new item at that store.
In the electronics industry, reverse logistics practices are invaluable, since technology turns over at such a rapid pace. By the next major holiday, the brand-new tablet a consumer fought to purchase this year will be out of date. The same can be said for that pair of jeans everyone is vying for this year, or the toys on every child’s wish list. With a trade-in and recycling program, the retailer can salvage useful product parts for profit and the consumer is able to purchase next year’s new must-have. Therefore, it is key for retailers to find a partner with the ability to handle recycling, triaging, repairing and re-selling in one place when setting up a reverse logistics program.
For the 2014 holiday season, retailers should keep in mind that success takes more than ads and displays alone and the right supply chain program can be critical for competing in the marketplace.
Doug Pasquale is Executive Vice President, Logistics Division Ingram Micro North America Mobility