Retailers should “hop on the integration bus,” recommended RSR Managing Partner Paula Rosenblum in a recent webinar. Rosenblum shared this advice while delivering insights from her firm’s recent Merchandising Benchmark Report. The sixth annual survey collected insights from 137 retail executives between June and August 2013. The September 24th webinar was sponsored by Predictix.
Noting survey results, Rosenblum said that retailers, overall, are not completely familiar with the merchandising tools and techniques currently available. For example, the following respondents said they had a solid understanding of:
- Forecasting (52%);
- Assortment optimization (45%);
- Integrated merchandise planning, allocation and replenishment (45%);
- Promotion optimizations (41%);
- Size optimization (34%); and
- Lifecycle price optimization (30%).
Confirming the need for retailers to better understand the benefits of merchandising tools and solutions, Rosenblum added: “We may not really understand what [forecasting] means, and why we should add that to our enterprise, and that’s kind of worrisome to me. It tells me sometimes we’re looking for magic bullets. That doesn’t mean these technologies don’t work — they do. But it’s important to understand how and why they work so your enterprise is well-trained as you adopt them.”
According to the study, gross margin has either improved (62%) or remained the same (18%) for most retail “winners” over the past three years. Retail underperformers, or “laggards,” were less fortunate, with 33% reporting that gross margin decreased over the same period.
As retailers grow in size and revenue, their business challenges change significantly, Rosenblum explained. For example, small mom-and-pop retailers never want their inventory to be out of stock.
Companies across size and revenue levels expressed the following concerns:
- Companies earning between $51 million and $249 million per year worry about losing touch with customers;
- Companies earning between $250 million and $999 million per year are concerned with maintaining inventory balance;
- Companies earning between $1 billion and $5 billion per year also concern themselves with inventory balance, but are more worried about eroding brand equity; and
- Companies earning more than $5 billion worry about Amazon and other major retailers cutting into sales.
The RSR study also found that retail “winners” are more advanced in battling organizational inhibitors such as arcane infrastructure, inventory issues, cultural resistance and complex cross-channel merchandising: 47% of “lagging” retailers said they don’t have the ability to conduct granular attribute analysis to drive new ideas in merchandising, as compared to only 24% of “winners.”
“Operationally, we find that we reward hard work with even more work,” Rosenblum said. “We all recognize — but winners more than the rest of us — that managing the complexity of cross-channel merchandising and retailing is not so simple.”
Rosenblum explained that technology can help businesses improve, but it’s up to the organization to understand the value of the solution to truly succeed. To that end, she recommended that retailers “hop on an integration bus” by tying their applications together with an integrated suite. She also encouraged attendees to be creative in their merchandising efforts and above all, refresh their technology if they feel it is outdated.
Click here to access an on-demand version of the webinar, titled: RSR Research: 2013 Merchandising Benchmark Report.