It’s no great revelation to claim that consumer behavior has fundamentally changed. Or perhaps that should be ”is fundamentally changing,” given that the goalposts and patterns of shopper habits don’t settle in any one spot for long, like they used to.

There are patterns to speak of but, increasingly, they’re tricky to spot as they pop up and fade, almost in real-time, across a complex array of purchase preferences and channel combinations.

For retailers trying to align inventory with demand this 2023 holiday season, it’ll be like catching falling apples from an uprooted tree in full flight. As hard as that sounds, it’s not a completely impossible feat.

Emerging in January with healthy numbers will mean keeping inventory placement tactics open enough to pivot towards in-the-moment demand patterns, while having the right data on tap for reading what those demand patterns are.

It needn’t be too much of a juggling act. Despite all the complexity in predicting the season, there are clear clues for how to tactically leverage inventory placement.

That said, retailers who’ll get it right will already have thought about adding smart, purpose-built inventory and ordering capabilities to existing architecture.

Coping With “Loyalty Shock” by Staying Available

One undeniable pattern to have come out of the COVID-19 pandemic is how, as consumers,  we’re breaking long-held bonds of loyalty, freely switching brands, and reverting to “plan B” purchases if our go–to retailers don’t have what we need, or can’t deliver it fast enough.

In 2020, amid the pandemic factors, McKinsey reported that 75% of U.S. consumers were trying new shopping behaviors, with 36%  trying a new product brand.

Of those who’ve tried alternative brands, 73% intended to integrate new brands into shopping routines, with Gen Z and high earners being most prone to switching brands.

Implications for retailers: Given the now fickle nature of brand affinity, retailers can’t afford to drop the ball on offering consistent value, with reliable product availability and fulfillment optionality across channels.

That means combining real-time inventory visibility with localized stocking capability, based on continual data insight to modify inventory based on regional preferences.

Retailers that nail this will emerge in January having established a new, regular customer base off the back of the 2023 season.

Ongoing Boom in Digital Commerce

Entertainment, apparel, food and grocery, and household items — according to the same McKinsey data – were the spend categories that witnessed at least 10% growth in their online customer base.

Digital commerce growth is no newsflash, but the rate of growth as we create more daylight between today’s retail reality and the pandemic is breathtaking.

To put it in perspective, Brian Gregg, senior partner at McKinsey, commented in a 2020 interview that, in just three months of that year, retail witnessed around 10 years’ worth of digital commerce adoption.

Fast forward to 2023, and it’s clear that the stratospheric acceleration of digital commerce has shown no letup. According to 2023 Shopify data, global online retail sales are projected to reach $6.51 trillion in 2023, with e-commerce websites taking up 22.3% of total retail sales.

Implications for Retailers: To capture digital commerce, retailers will need specific capabilities in cross-channel synchronization able to help accurately forecast local demand and meet it continually while keeping light inventories.

Additionally, store-specific insights and end-to-end supply chain visibility will be critical for nimbly pivoting fulfillment operations toward digital channels during peak demand.

Digital Commerce May Be Hot, but In-Store Hasn’t Gone Cold

Despite the unstoppable boom in digital commerce, retailers will need to factor store experience and fulfillment when thinking about tactical inventory placement.

In the first half of 2023, The National Retail Federation (NRF) revealed its 2023 retail forecast in its third annual State of Retail & the Consumer event, and brick-and-mortar retailers had a few things to smile about.

What’s notable is that, as we pull away from the pandemic, e-commerce has shifted from a stand-alone phenomenon to being one of several components of consumers’ shopping experiences.

According to the NRF, “While many consumers continue to utilize the conveniences offered by online shopping, much of that growth is driven by multichannel sales, where the physical store still plays an important component in the fulfillment process. As the role of brick-and-mortar stores has evolved in recent years, they remain the primary point of purchase for consumers, accounting for approximately 70% of total retail sales.

Implications for Retailers: For the 2023 holiday season (and beyond), strategic inventory placement — to cater to this blended shopping environment — will be the difference between “revenue” and “profit.

Customers will expect to be able to switch and combine online and offline channels effortlessly, and inventory tactics should be geared to reflect this duality, ensuring failsafe, fast product availability both in-store and online.

Aligning Inventory Placement With Demand This 2023 Holiday Season

As e-commerce thrives alongside brick-and-mortar stores, retailers will need to turn the art of how much inventory to hold, and where to position it, into a precise science to maximize availability to local and distant customers — no matter their preferences — while taming costs prone to ballooning through small, but cumulative inefficiencies.

Speak with a Blue Yonder expert about seamlessly adding AI-infused inventory and ordering capabilities to your existing architecture in just weeks, to maximize opportunity this holiday season.