Written by Ellen Dixon, Vice President Sales Consulting, Predictix
Monday, 11 June 2012 16:10
Retailers and brands today face a double-edged sword. On one side, omni-channel retailing and proliferating customer touch points provide more opportunities than ever to engage with and sell to customers. On the other side, to meet customer expectations, companies must manage their business processes and decisions in a way that is consistent and tightly connected. This is especially true for merchandise planning, and the changes have left some retailers scrambling to meet a customer demand that is more fluid than ever.
Traditionally, wholesalers and merchants have done their seasonal planning many months in advance, beginning with sales, margin and inventory productivity targets, then developing assortment plans and seeing them through the design and product development process. Once the merchandise arrived (and either sold or didn’t sell), the plan was never revisited. This is how things have been done for decades, and it worked well enough – until recently. Today, with the explosion of customer touch points and channels across the retail landscape, merchants must be able to anticipate where their customers will want to shop with them and have the proper inventory available and in stock at that point. Since consumers are inundated with choices for where to shop, even one bad experience could lead a long-time customer to take their business elsewhere.
Continuous, In-Season Planning
So how can companies prevent that from happening? Smart brands and retailers have begun executing continuous in-season planning to stay in tune with key factors driving customer purchases, and ultimately to create and adapt plans that are more accurate and effective. With a continuous planning approach, businesses can better shape the allocation of the buy plan, thanks to increased visibility to trends and a better baseline. And by adopting a connected approach that seamlessly links processes from financial planning all the way to purchase or production plans, retailers and brands can more effectively and efficiently meet demand. This kind of planning requires the right technology to deliver the analytics and “science” aspects of planning. After all, while merchandising and planning have long been viewed as an art, best-in-class merchants realize that science can help them understand their customers and sense, predict, and respond to consumer demand with a speed and agility that would be otherwise impossible.
Not only can connected, continuous planning lead to improved process efficiency for brands and retailers, it also results in more accurate plans, thus improving inventory productivity and gross margin. When it comes to making connected, continuous planning part of your business strategy, however, not all technologies are created equal. First, planning tools have to be easily tailored to meet retailers’ process needs, including cross-channel integration. This enables companies to break down silos when making critical merchandising decisions and bring together their merchandise planning and assortment planning processes to best identify business opportunities. Solutions must also be able to consider the unforeseen touch points, channels and data that will inevitably emerge; who can predict where the next Facebook, Twitter or foursquare is coming from and how it will impact consumer shopping?
Moreover, connected, continuous planning requires a technology solution that gives businesses access to all of their data at all times, and that allows all data and the ripple effect of decisions to flow across all relevant business processes. From this perspective, an emerging class of Cloud 2.0 applications — designed specifically to take advantage of the cloud's unlimited on-demand capacity — allows retailers and brands to access all of the data all of the time and scale across business processes by drawing upon as many servers as needed, without impairing performance. Having a unified planning process and access to unlimited data eliminates disparities between different stakeholders within retailers and brands. There is always a single version of the truth, and users can easily scale their planning processes — such as adding more data or more users — by drawing upon additional computing power, enabling them to solve old and new merchandising problems in a fundamentally different way.
Brands and retailers can now unlock the full potential of connected, continuous, in-season planning, and the cloud makes it possible. Integrating all the available data from every channel, sharing it with all their business users, and producing plans on a timely basis simply can't be done with conventional architectures and traditional hardware. The cloud fundamentally changes the size and scope of the information that can be brought together and understood with far more powerful analytics, allowing retailers and brands to operate with the agility and flexibility that today’s shoppers demand.
Ellen Dixon is the Vice President of Sales Consulting at Predictix. She works closely with leading retailers to define compelling cloud-based solutions to their merchandising and supply chain needs.