Paul Winsor, Director of Market Development, Retail & Services, at Qlik and Rachel Lund, Head of Insight and Analytics at British Retail Consortium
As the next “holiday” after the Christmas period, it’s easy to see why retailers can get carried away by the romantic idea of Valentine’s Day. However, while images of love hearts and red roses slapped across store fronts can make us feel like love really is all around, the reality is that when it comes to consumer spending it’s a drop in the ocean compared to other holidays.
That’s not to say that money cannot be made from the occasion. But businesses would do well not to fall completely head over heels if they want to avoid an awkward and drawn out break up for the rest of the year.
Valentine’s Day is strongly associated with red roses, boxes of chocolates, champagne, fancy restaurant dinners and frantic last-minute purchases from male shoppers on their way home from work. While these images are synonymous with February 14th, and probably will be for a long time, consumer attitudes have changed – and staying loyal to the Valentine’s stereotype could be costly.
Roses are red… but stock with care: A staple of Valentine’s Day celebrations, retailers are likely to stock up on roses to make sure they have plenty to sell during peak season. However, while the red rose is a popular gift as ever, as a perishable low-cost item, retailers should order sensibly to ensure there aren’t too many left on the shelf. This is where drawing on historical sales data is vital. Retailers should be asking themselves: How many roses did I order last year? How many did I sell at full price? How many did I have to dispose of? What profit did I make from this item? When it comes to roses, or any other time-sensitive perishable items, sales strategies and quantities should be based on the answers to these questions.
Cynicism and tighter purse strings: It is important to remember that Valentine’s Day will not appeal to everyone, and there will always be those who are cynical of the holiday – who tend to turn away from heavily branded stereotypical gifting. Let us also not forget that in the immediate aftermath of precarious January finances, customers are likely to be feeling the pinch. In addition to this, currency devaluation has driven prices higher, which means consumers are watching the pennies a bit more closely – meaning retailers will really have to demonstrate the value and distinctiveness of their products.
All bang and no fizz: Consumer trends are constantly changing, and “retail holidays” are a great way to ride on the coat-tails and boost sales. For example Gin is becoming a rising star in the drinks industry, with sales in the UK rising by seven million bottles last year. Champagne and Prosecco are the traditional staples of the Valentine’s Day shopping basket, and it is easy to see why supermarkets give the bubbles prime space on the shop floor, but pushing a new trend could boost sales further. Retailers should look at what surprising items sold well over the winter period to predict the items that could enjoy a second wind during Valentine’s Day.
Distance makes the heart grow fonder, location makes the tills ring louder: There will always be those shoppers who leave their Valentine’s Day purchases to the very last minute. The images of men (or women) stopping off at a petrol station on their way home to purchase flowers is a cultural reference for a reason. However, retailers should not place orders relying this last-minute spike in sales. This is where Geo-Analytics comes into play. Where a retailer’s store is based could seriously alter its sales strategy. For example, being strategically placed on the commuter belt, or near a train station, increases opportunities to capitalise on last-minute purchases. However, being in an out-of-town shopping complex will make passing trade for these sudden spikes in sales less likely.
While these specific examples are tied into Valentine’s Day, the lessons they carry ring true for all retailers throughout the entire year. Keeping close to the mood of the market is key. A combination of insights from previous sales, predictive and geo-analytics will also help shape a solid retail strategy, and a love affair with customers that will last for more than a week.