Christmas Tree Analytics

According to research firm IBISWorld, Americans will spend around $3.4 billion buying over 25M Christmas trees this year, and you can see how those numbers break down in this Business Insider article.

Last year, one large international retailer used SAP BusinessObjects Explorer analytics to look at trends in Christmas tree data. The overall trend looked something like this:

But when the company dug down deeper, the company realized that they were actually facing two very different selling opportunities, with different characteristics. The first wave of sales was to institutions – retail stores, schools, etc., and the second wave was to individuals. The product and pricing decisions were very different for the two groups. For example, businesses bought early, wanted larger trees on average, and didn’t mind if they only lasted until the 25th – while consumers bought later, were more price-sensitive, and wanted the needles to stay on until at least New Year.

Being able to separate the two trends means the retailer can be much more proactive at ordering, stocking, and pricing the right assortments of trees in the right stores at the right time for the 2013 Christmas season – making sure that customers find what they want, while optimizing their profits.

There’s also a real-time analytics aspect to this — human nature being what it is, many consumers buy their trees at the last minute (in real life, the curve above should probably be drawn more as a cliff, with sales plummeting late on Christmas Eve).

Retailers want to have just the right number of trees on hand for Christmas Eve. To do this, they need to combine a solid history of purchasing trends from previous years with the ability to react quickly to any changes observed on the day – which could depend on a host of variables, including the weather, traffic, etc. Better analytics means better last-minute discounting strategies and higher profits…

These principles apply to just about anything being sold during this gift-giving season, and shoppers are demanding an ever-more personalized, interactive experience. Check out SAP Precision Retailing — a solution that includes analytics in the cloud and mobile interfaces for consumers — for more details.

Have a happy holiday season…