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There are lots of stories about how the term “Black Friday” came to be in the retail world.  In the financial markets, any such term brings fear to the hearts of investors and traders alike.  Philadelphia police in 1961 used the term to describe the traffic mess on the busiest shopping days of the year (Friday and Saturday following Thanksgiving).  Marking the official start of holiday shopping in North America, Black Friday has developed into a positive meaning for retailers and shoppers.   There is excitement in the range of offers made and getting a great deal!  Retailers count on the holiday shopping season to start making profit and getting into the black.  For US retailers in general, holiday sales represent about 20% of sales, but that number varies greatly among retailers and can represent 40% of a retailer’s annual sales. 

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Let’s take a look at some numbers from the just completed Black Friday weekend period:

  • Since 2005, retail sales during the period have more than doubled from $27.8 to $59.1 Billion in 2012
  • This year a record 247 million (139.4 million unique) shoppers visited stores and websites (226 million in 2011)
  • Average shopper spent $423 over the weekend (up from $343 in 2009 – a 23.3% increase)
  • Online sales captured 40.7% of the weekend’s spending (up from 26.8% in 2007 – a 52% increase)
  • Walmart reported best ever Black Friday event ringing up nearly 5,000 items per second
  • Top five retail websites: Amazon, Walmart, Best Buy, Target, and Apple in that order according to comScore
  • Online sales surpassed the $1 billion mark for the first time according to comScore
  • Thanksgiving Day 2012 (November 22) saw a huge 32% increase in online sales from previous year
  • Lively discussion on Black Friday in the blogosphere including this one at Retailwire

As a marker for the economy, the retail industry is posting strong numbers. Shoppers are seemingly more confident and retailers are taking a view to the future.  Retailers are not only delivering exciting events and offers but are also focused on what customers do value.  Among other things, that means consistent interaction with customers regardless of time, channel, or device; being in stock on key and promoted items; having empowered and knowledgeable store associates; and transforming the checkout/payment and returns processes to be easy and hassle-free (store or online). Today’s retailing environment is far more challenging and complex than ever before.

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What I see from the Black Friday weekend numbers is the amazing growth of online sales which continues at a multiple of sales growth in the store.  Online has become integral to the shopping experience and can’t be ignored. But the counting can also get a bit messy as many leading retailers are offering shoppers the opportunity to buy online and pick up in store.  What we have is a hybrid future where the store will remain a key and differentiating asset in a retailer’s strategy.   It will fit squarely in the middle of the integration with the mobile, social, and digital trends for a consistent brand experience.  And that requires analyzing and visualizing in real-time a huge amount of data with all its variety and granularity (the proverbial big data opportunity). 

Retail winners will be those who do take this strategic view and use innovative technologies to connect with the multichannel shopper as core to future growth.  That means delivering on the brand promise where, when, and how their customers want to shop and truly understanding the customer journey along their path to purchase.   We heard at the last Shop.org annual conference in Denver from retailers that have seen significant spending increases from connecting with customers via multiple channels (see Mohamed Amer’s blog).   Today’s connected customers have redefined the shopping experience and are making service demands like never before.   With all the choices customers have today retailers must continue to invest in their associates, processes, and innovative technology to help solve not only current challenges but open up new opportunities for growth.

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Based on my many conversations with retailers in many regions of the world, I’ve found four broad business priorities that are consistently at the top of annual budgeting and future investment plans:

  1. Develop a customer-centric merchandising approach that bridges planning and execution – use real-time customer insight and predictive analytics to deliver on merchandise and assortment plans and apply a common customer view to create integrated marketing and promotions with real-time personalized offers.
  2. Build a unified customer experience at each interaction – Make your brand and stores relevant to your customers.  Combine the treasure trove of social media sentiments, customer behavior, and buying trends with advanced analytics to deliver consistent and inspiring shopping experience regardless of the channel.
  3. Make your supply chain customer-driven – combine real-time consumer data with actual supply chain information so you can better anticipate customer demand and are ready to fulfill these irrespective of channel or source.
  4. Turn your business network to a key differentiator in your operations – collaborate efficiently on your sourcing, buying, or private label manufacturing needs.  There are tremendous opportunities in this area.                

Although Hollywood has gone digital long ago, they continue with the tradition of exclaiming “it’s in the can” to mark the end of a movie project.   For retailers about four more weeks are ahead before we can take a very brief pause and make our own declarations.  Lots of opportunities lay ahead in 2013 and it’ll start with a terrific show in New York:  The National Retail Federation 102nd Annual Convention and Expo – Retail’s Big Show.  The NRF is a truly global event and SAP is honored to be a Chairman’s Circle Sponsor. I look forward to seeing you there!

I’d love to hear from you about what priorities and plans you see ahead in 2013 for your business.

Happy Holidays and let the registers ring!

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