Whether you choose to celebrate Valentine’s Day or not, last weekend you couldn’t escape the red hearts and roses on the high street. Valentine’s Day is the fourth largest day for retailers, where couples splash out on romantic gifts for their valentine. In the UK consumers spend on average £35 on a gift. There is a huge opportunity for retailers to maximise sales, which is especially needed after a disappointing winter holiday period.
An empty shelf is not the right way to say "I love you"
We conducted some research into Valentine’s Day shopping in the UK and the results were surprising. Almost 50% of consumers in a relationship were unable to purchase a gift due to shops being out of stock. We were surprised to see that.
This could be due to retailers still relying on gut feeling when making decisions. Retailers must ensure that their predictions for sales and demand is as accurate as possible to avoid turning customers away because of empty shelves and also to avoid having waste after the valentine’s period.
This is where automation can make a big impact. By automating the stock replenishment process, retailers can become much more efficient. For example, one of our clients who has 99.8% automation for replenishment, have found savings include:
- €20m less waste
- €5m capital
- €5m more efficient
- 20% less out of stock because the right products were in the right quantity at the right time
Pricing yourself out of the market
But our research also showed that retailers need to be price conscious and get the balance right between being competitive and out-pricing themselves out of the market. It is important to fully understand who your target audience is; what the peak shopping times are and that they are predicted accurately.
Our research revealed that millennials are the most generous in their Valentine’s Day giving, spending on average £46 (a 31% increase from the average spend of £35). The over 55s are the least likely to spend, with an average spend of £20.82.
Men also spend significantly more than women - £42 versus £29 - and those who have been in a relationship for 5-6 years spend more than any other relationship length, spending an average £57.06 on the romantic day. Interestingly, unmarried couples spend more on valentines gifts, digging deep into their pockets for an average of £41.80 versus married couples average spend of £34.
Perhaps due to the last minute nature of Valentine Day shopping (a fifth of men buy their gifts on the day or the day before), the research found that shoppers are prepared to pay more on gifts including cards, flowers, lingerie, chocolates and perfume to ensure they have their valentine’s gift on time. For instance, Brits are prepared to spend:
- £5.98 more on flowers
- £4.69 more on chocolate
- £4.43 more on a card
- £16.58 more on jewellery
- £12.73 more on perfume
- £18.29 on a romantic dinner
- £28.48 more on weekend’s away
But despite this, customers are still price conscious and are not prepared to stretch the purse strings too far for the perfect gift. 47 per cent of shoppers said they couldn’t buy their intended gift because the price was too high.
Optimising your pricing is crucial for any retailer. Price too high and you lose your customers to the competition; price too low and you miss out on better margins during a key event on the retail calendar. Retailers must ensure they have a pricing strategy in place that balances consumer expectation with optimising margins.
These findings provide a stark warning to retailers to ensure they implement an effective replenishment and pricing strategy and start to implement Predictive Analytics solutions now.