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 Post-Christmas
sales in the US are a unique marketing gameplan. Retailers and manufacturers
have complex sales-forecast systems using a combination of statistical
analysis, heuristics and forecasting models bundled into software
packages, writes Mohan Babu
January
in the US is the time of the year when all the Christmas presents
have been opened and people heave a sigh of relief, having enjoyed
another hectic holiday season. After Christmas get-togethers, people
fly back from their parents or relative’s places and try to
get back to their lives. Christmas is generally associated with
the tradition of gift giving and most people exchange numerous gifts
and goodies. Gifts are generally exchanged between relatives, friends,
colleagues and co-workers with much anticipation and relish. This
year saw the continuation of the tradition; even a slowing economy
and the aftermath of September 11th did little to dampen the spirit
of the holiday season. If anything, people were more resolved to
let loose and enjoy themselves.
Most
companies in the US also got into the holiday spirit and hosted
holiday parties and bashes. Our company has an annual tradition
of hosting a holiday dinner, which they continued even this year.
This was really refreshing, especially since most other companies
did away with theirs, citing ‘lack of budget’ as an excuse.
 During
Christmas, although it is customary to exchange gifts, expensive
gifts are generally reserved for close friends and family. Gift
giving, and more importantly receiving, is a kind of contradiction
for most Americans because they are individualistic by nature, preferring
to shop for their own goods and services. Hence, even though there
is an element of sentimentality attached to gifts people receive,
they do not balk at the prospect of taking the gifts back to the
shop and exchanging them for something that they “really”
want. This is especially true of gifts received from distant relatives
who happen to give expensive gifts because they could afford them.
Supermarkets
also facilitate exchange of unused gifts by making it really easy
for consumers. Interestingly, when you happen to go to a superstore
during December, the checkout person will automatically ask if you
want a “gift exchange” receipt along with the item, the
same way they ask if you wanted the item to be gift-wrapped. Most
large stores in the US have a policy of giving refunds for any merchandise
purchased, provided one can show the original receipts. In case
of gifts, the giver may not be inclined to give the receipt with
the gift, hence the concept of gift exchange receipt. This way,
marketers are able to create a win-win situation for both the giver
and receiver of gifts, in the process generating goodwill.
The
flip side of all this gift giving, exchanges and returns is that
it provides some consumers an incredible buying opportunity. Since
most of the “hot” products are created especially for
sale during Christmas time, immediately after the holidays, malls
and superstores become anxious about disposing unsold inventory
as soon as possible. This is especially true since the bulk of retail
sales take place between October and December and marketers do not
want to be laden with unsold inventory for months on end. In order
to induce customers, “January Sales” are generally held
by slashing prices with deep discounts and offering “zero percentage
interest” rates. Savvy customers make sure that they do not
spend all their savings on holiday purchases and stash away a part
of their slush funds for just these kinds of sales. This year, the
hot items on sale were DVD players and Microsoft’s Xboxes produced
in anticipation of the holiday season.
Christmas
sales are not the forte of marketing people alone. An interesting
aspect of the sales is complex sales-forecast systems used by retailers
and manufacturers. These systems use a combination of statistical
analysis, heuristics and forecasting models bundled into software
packages. Marketing gurus analyse reams of data to decide what will
be hot and what not to stock on the shelves. For instance WalMart,
one of the largest supermarket chains in the world is also the owner
of the largest data-warehouse in the world. They are pioneering
massive data mining to transform their supplier relationships. With
the complex systems at their disposal, they capture point-of-sale
transactions from over 2,900 stores in six countries and continuously
transmit this data to the massive 7.5 terabyte Teradata data warehouse.
WalMart allows more than 3,500 suppliers, to access data on their
products and perform data analyses. These suppliers use this data
to identify customer-buying patterns at the store display level.
They use this information to manage local store inventory and identify
new merchandising opportunities. Interestingly, even back in 1995,
WalMart computers processed over one million complex data queries.
Advent of e-commerce technologies and XML has made collaborative
data sharing between retailers and suppliers a breeze.
As
global trade becomes more prevalent, we are going to see an increased
reliance on the use of sophisticated sales modelling and forecasting
systems. Just as the supply chain wave has made most companies aware
of the efficiencies that can be achieved by streamlining their production
and supply chains, retail forecasting models are going to come into
prominence, help retailers and global marketers.
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