From peak to planning: Setting up for success in 2025

Once again, Australia's retailers navigated some economic challenges during 2024. That's why peak season - starting with the Black Friday sales phenomenon and culminating in Boxing Day sales - was eagerly anticipated for retailers looking to end the year on a positive note. Whether peak season was lucrative or underwhelming, there are lessons to be learned from it. 

With 2025 stretching out ahead of us, it's an ideal time for retailers to reflect. Retailers big and small should spend time during the quieter weeks ahead determining what worked well and what could be improved, to put in place proactive strategies and make the most of 2025. 

How did sales perform?
For retailers, a simple, but one of the most important, metric to measure is sales performance. Understanding what sold well and what underperformed is critical. Retailers should dive into their data to look at revenue by SKU (stock keeping unit), revenue by product category and sales growth year-over-year. If certain products exceed expectations, retailers should consider expanding their range or featuring them more prominently in their marketing. For items that didn't sell as well, retailers could consider anything from discounts to clear excess stock, to smaller stock runs or even removing them from their inventory moving forward. 
 
On top of raw sales, it's important to understand which products generated the best margins. If a retailer sells 20 scarves, which cost $8 to produce, for $15 each, they generate $140 profit. But if they sell 17 beanies, which cost just $3 to produce, for $12, they generate $153 profit - more than the scarves, despite selling fewer units at less per unit. Ultimately, the more sales metrics retailers can access and analyse, the more strategic and data-driven they can be in their decision making. Through point of sale platforms like Lightspeed, retailers can not only facilitate sales, but analyse their past performance and strategically plan for future opportunities.

Was inventory managed effectively?
Efficient inventory management is just as critical as driving sales. Did retailers encounter stock outs, where they weren't able to replenish popular items as quickly as people bought them? Did they have excess stock, where they were unable to move a particular SKU? Did they know what inventory they had and where it was located, in real-time? Was it easy for shoppers to see accurate inventory updates?

Managing inventory is just as important as selling it. On the surface, selling out of an item sounds like good business, but if other shoppers can't purchase that item because it's out of stock, it can create disappointment and potentially lost revenue. Excess inventory ties up capital and space. And if a shopper can see a product as available online, but can't purchase it in-store because inventory isn't up-to-date, it can impact customer experience too, especially as Lightspeed research shows that 45% of consumers research a product online and purchase in-store.

This analysis should boil down into a sell through rate, which calculates the percentage of inventory sold compared to the amount of stock received from manufacturers or suppliers in the same period. With these insights, retailers can plan their inventory more accurately in 2025, even taking into account seasonal fluctuations in demand.

Which marketing channels were most effective?
Marketing is a crucial driver of both customer acquisition and retention for retailers. Retailers that analyse ROI, conversion rates, and engagement metrics like click-through rates and social shares can better understand what resonates with their audience. Rather than measuring their marketing as one broad function, if retailers delve deeper into specific channels and strategies they will be better placed to assign their future budgets more effectively.  

Retailers can consider metrics such as ROI, conversion rates, and engagement metrics such as click through rates and reshares. When done for campaigns and channels, retailers can better understand which platforms drove the best ROI, and which narratives, CTAs and marketing collateral was the most appealing for their audience. With these insights, retailers can optimize their marketing strategy for 2025 by targeting the right customers, in the most effective channels with the impactful messaging. 

In-store, eCommerce or both?
As eCommerce penetration has surged in the last two decades, many conversations have pitted in-store versus online retail. In-store experiences still hold significant value, with Lightspeed research showing that 76% of consumers shop in physical stores at least once a month and 56% saying they're drawn to physical stores to view, touch and try-on items. Both online and offline channels can co-exist beautifully in an omnichannel strategy. 

Retailers should analyse online metrics such as website conversions and cart abandonments, in-store foot traffic and average transaction value for each channel. With these insights, retailers can be better placed to not only improve the performance of each channel individually, but also optimise the way the two channels integrate with and complement each other in 2025.

For retailers, peak season may have provided a welcomed revenue boost as consumers stocked up and spent up ahead of the festive season. However its value is long-term, too, providing a great platform to build strategies for the year ahead. If retailers can better understand how to improve sales, master their inventory, optimise their marketing and integrate their online and in-store approaches, there could be plenty of opportunities to succeed in 2025.