Nowhere is this truer than in the retail sector, which saw demand rise exponentially and, in some cases, unexpectedly. Ten years ago this might not have presented a problem, as most bricks-and-mortar retailers would have welcomed queues of customers winding out of their stores and out into the streets of their local High Street. However, as the weather turned colder and the nights began to draw in last year, it seemed that more and more consumers chose to stay away from visiting local stores and caught the online retail bug instead.
Indeed, Ipsos Retail Performance reported that fewer shoppers hit the streets on Boxing Day than in previous years, with footfall down by 4.7% on what is traditionally one of the busiest shopping days of the year, with many experiencing huge online Christmas Day surges instead. What this tells us is that people’s festive shopping behavior is changing, with many not only choosing to shop online, but an increasing number also to do so well ahead of the Christmas period.
Black Friday is an excellent example of this. Traditionally an American tradition, the idea of discounting stock at the end of November, and in anticipation of the pre-Christmas rush 2014 was the year this phenomenon took off in the UK. What was perhaps surprising was the extent to which some of the leading names in ecommerce were caught off guard by the sudden upsurge in demand, with the likes of John Lewis and Argos all struggling to cope with the increased traffic their websites were experiencing.
But are these problems avoidable at a time of year when surges in customer demand are frequent? The answer is an emphatic yes, and it’s one lesson that retailers would do well to learn as they look back at how they performed at the busiest time of their year. Christmas 2015 might seem like a long way away, but if there is not a fundamental change in mindset put in place before then, many e-retailers could face the same issues later on this year.
What’s clear is that too many businesses have been guilty of being a little too restrictive in their thinking. The vast majority tends to plan their expected or anticipated capacity for traffic a month in advance. This means that if there is a sudden spike in traffic that they haven’t accounted for, their website will go down or perform badly, leading to lost customers and revenue.
To return to our previous example of a bricks-and-mortar retailer, it’s a little like restricting the number of customers that are physically able to enter your store at any given time. When you factor in the fact that today’s customers are becoming increasingly impatient and unwilling to wait, then asking them to wait in a queue ‘outside’ their online store is no longer a viable option. Instead retailers must start to think three dimensionally when it comes to resource planning.
The answer is to put infrastructure in place that is able to deal with the elasticity of demand, and which can scale upwards or downwards to deal with it. They must stop thinking of their online retail space as a finite resource that can only allow a certain number of people at any time. Indeed, to do so is to undermine the value proposition of the entire online shopping experience. Instead of viewing it as a physical space with four walls and a limited capacity, they must be prepared to see it as a constantly shifting resource that can react to what their customers are doing in real time and respond to it.
One thing’s for sure – as the last of the New Year hangovers clear, the sore heads experienced by party-goers will be nothing compared to the headaches faced by retailers if they get their online retail strategy wrong. Perhaps the biggest lesson we can all learn from the festive period is that although capacity can be the key to retail success at the busiest times of the year, it’s also something that must be scalable and flexible. If you have one New Year’s resolution for 2015, make sure it’s that you and your online retail business begin to think three dimensionally!