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Caroline Procter

  01 Nov 2016 • By Caroline Procter in Industry News

  

Strategies to Ensure a Quick, Painless Implementation

Supply chain management has come a long way over the last 20 years, according to a new whitepaper by Hatmill, a leading supply chain and logistics consultancy and JustEnough implementation partner.  Before the advent of social media, online shopping and increasingly demanding and discerning customers, forecasting and replenishment activities existed but only at a very basic level. Today, very few retail, wholesale or manufacturing organizations can function without a dedicated team of supply chain professionals – and for good reason. A solid supply chain gives businesses a competitive advantage, allowing them to forecast and plan for demand, which in turn helps increase availability, reduce stock levels and markdowns and, ultimately, increase sales and profit margin.

However, as the supply chain game has changed, so too has the competitive landscape. Businesses must contend with challenges that run the gamut from higher customer availability expectations to increasingly complex supply networks to erratic demand patterns resulting from promotions and markdowns.  

As such, the stakes are high to achieve supply chain optimization – companies that succeed stand to see significant gains in terms of higher turnover, lower inventory levels and reduced operational costs. This is no environment for spreadsheets and disparate planning tools – the right solutions are paramount. Advanced supply chain technology is designed to intelligently forecast for demand; strategically define service-level, product-segmentation and associated safety-stock policies; provide full modelling capabilities against complex supply networks; as well as correlate demand impacts – from weather to social media.

Choosing the right supply chain management solution is only part of the equation: the implementation itself is also a key consideration in the quest to achieve operational excellence and a quick return on investment. The Hatmill article outlines the following challenges organizations often encounter when implementing new forecasting and replenishment solutions – and how independent support can have a positive impact:

  • Providing implementation balance: How much should a business bend its ways to accommodate new technology, versus how much should a supply chain solution be modified to fit the business? That's a tricky balance to strike, but a knowledgeable, experienced implementation consultant can help weigh the options and help the organization avoid costly mistakes.
  • Effectively resourcing the change: An organization’s technology team should be focused on driving a successful software integration, whereas the solution’s future users – a.k.a. the forecasting, planning and replenishment teams – often struggle with being involved in the implementation while keeping up with the day-to-day needs of the supply chain operations. Qualified implementation consultants know what it’s like to be in either role – as such, they are best-positioned to drive the deployment while ensuring all parties are in full agreement, continuously engaged but with minimum disruption to the business.
  • Ensuring strategic alignment: No doubt, the decision to deploy new supply chain software is often a costly endeavor that stratifies the entire organization – not just its supply chain and IT teams. Good change management practices point to the need for consistent, cross-business communication regarding the implementation. Showing how the new system aligns with the company’s overarching strategic goals is paramount to ensure buy-in. The cross-functional benefits, impacts and change in process should be identified, planned, communicated and managed throughout all phases of the project.
  • Capability to succeed: The best implementations take into account the needs future users will have – well before the solution goes live. New skills and expertise may be required to manage the system, which could impact existing team structures. An experienced consultant can help organizations assess their existing teams and understand where any gaps may exist, as well as provide day-one support until new talent is on-boarded.
  • Effective process adoption: The ease in which new supply chain technology is adopted varies from system to system, and from organization to organization. Having led any number of implementations, outside experts can assess existing business processes, capabilities and user behaviors, as well as identify any barriers to adoption success. Such consultants often bring to bear best-in-class process flows and training programs to help ease the transition.
  • Accelerated Benefits Realization: Knowing where to begin once a new system is live is crucial. Often, the simplest approach is the right one: The Hatmill article points out that utilizing a new solution in the most basic form often drives 80% of the anticipated benefits.
  • Making it stick: To underscore the point above, the first six months following deployment is the most important and can make or break the decision to invest in new technology. During this time, users are most susceptible to adopting or rejecting the solution. As such, post-implementation support should not be overlooked: It’s often much more about managing user expectations and process changes, versus the technology itself.
  • Making it great: Supply chain consultants can help users become more sophisticated in their approach to using new technology as time goes by. Doing so will generate greater results and establish a culture that celebrates ongoing optimization – a clear win for the business.

For more on implementation best practices, read the full article or visit www.hatmill.co. Contact JustEnough today to learn how our end-to-end, fully integrated and easy-to-use suite of retail planning solutions are quickly and seamlessly implemented to help businesses achieve bottom-line results within months of go live.


Keith Whaley

  25 Oct 2016 • By Keith Whaley in Opinions

  

Customer-Driven Attributes: The Next Wave in Customer-Centric Retail Planning

It's no secret that retailers have struggled to corner market share, drive brand loyalty and increase revenue due to changing consumer purchasing behavior. The emergence of new channels, heightened price and promotion sensitivity as a result of an in-flux economy and the rise of a more tech-savvy demographic have also weighed down profitability.

In response, retailers are becoming increasingly consumer centric to ensure that today’s demanding and discerning shoppers find exactly what they are looking for at the right time, in the right location and for the right price. While not a new concept, many have adopted an attribute-based planning approach. This means leveraging store attributes like sales volume, selling space and climate, and product attributes like color, silhouette, fabric, fit and size, to estimate demand for new products and guide their merchandising, forecasting, assortment planning, allocation and replenishment strategies.

Traditional attribute-based planning has proven to be beneficial in many ways: retailers can better anticipate likely demand for new products, gauge how changes in inventory will impact sales, and as a result, create more targeted cross-channel assortments and allocations.

However, there are drawbacks. Here’s an example of how relying solely on store and product attributes can take a toll: A clothing retailer leverages quantitative store and product attributes and, as a result, realizes blue cashmere sweaters performed well last spring in a specific cluster of stores. While helpful, that information alone fails to give the retailer true insight into why that was the case, or if the trend will continue.

This month, JustEnough Software and Capgemini collaborated on an article published in Apparel that focuses on a shift in the way advanced retailers think about their planning processes. Today, organizations are armed with greater access to increasingly granular and more meaningful shopper insights made available through digital commerce and marketing initiatives, customer loyalty programs and transactional data, which can reveal critical insights about a shopper’s lifestyle, aspirations and interests. Dynamic and qualitative in nature, such customer attributes help retailers better understand what drives customers to open their wallets.

Let’s take, for example, a retail chain whose San Diego store sells more cold-weather outerwear than any other across the country. Store attributes suggest that the store should behave like those based in other warm weather climates; yet, customer attributes reveal that shoppers in the area tend to head to higher altitudes to ski on weekends and holidays. Offering an assortment more conducive to its customers’ active lifestyle has helped the store increase sales by providing customers with the products they want and need.

But, zeroing in on the driving characteristics among a retailer’s core customer base and not just the once-in-a-while shopper can be challenging. In the article, we explore strategies to help retailers move toward customer attribute-based planning:

  • from combining what they know about their shoppers with their own brand vision to create customer profiles;
  • to tapping their e-commerce and marketing teams to better understand where their customers live and what drives them to purchase;
  • to gathering information about local culture and product affinity from store managers;
  • to testing their customer-attribute theories by rolling out localized assortments to a limited number of stores at first.

Be sure to read the full Apparel article here, and contact us to learn how JustEnough Software and Capgemini can help your organization adopt a customer attribute-based planning model.


Caroline Proctor

  18 Oct 2016 • By Caroline Proctor in Industry News

  

Recommendations to Help Retailers Transition to an Optimized, Integrated Assortment Planning Process

In this final blog post highlighting findings from the EKN 2016 Assortment Management and Optimization report, I’ll shed light on the recommendations it offers to help retailers create balanced assortments that drive sales while aligning with financial and merchandising goals.

Sponsored by JustEnough Software and based on survey responses from about 50 North American retailers, the report concludes that for more than one-third of retailers, assortment management is yet to be connected to allocation in a real-time process or at a user level. Roughly the same percentage of retailers cite that their assortment planning process is not integrated with financial and merchandising plans. Additionally, shortcomings related to a lack of accurate demand forecasts, consumer insights and a multi-attribute based planning process hinders the development of precise assortments that boost both traffic and margins.

Retailers can circumvent these challenges by transitioning out of legacy systems, opting instead for a single, unified and integrated merchandising process-based platform guided by four strategic pillars: customer science, digital user interface and experience, integrated workflow and functional collaboration. They can further reduce the silo effect by adopting a series of user-level integrated workflows supported by best-in-class solutions that generate targeted and balanced assortments.

The EKN 2016 Assortment Management and Optimization report offers specific recommendations to help retailers improve their assortment planning and execution process over a short-, medium- and long-term period of time. A few examples include:

  • Over the course of the first six months, retailers should set benchmarks and KPIs to measure targeted pre-season and in-season assortment progress – i.e., shorter lead times, on-time orders, inventory accuracy, lower lost sales, higher full-price sell through and reduced markdowns, for example.
  • Within the first 12 months, retailers should migrate to a multi-attribute based assortment planning system, enabling them to create attribute-based assortments based on common product specifications (i.e., size, color, styles, etc.) and customer segmentation attributes (i.e., preferences and affinity).
  • At the six-month mark, retailers should ensure full functional and organizational integration between merchandise planning, assortment management and allocation for strategic planning. At this time, they should also add a consumer insights module within the merchandise and assortment management system for seamless access to customer behavior data at the end-user level.
  • At the halfway point of the transition and through to the end, retailers should use investigative and predictive data insights to identify and resolve gaps in assortments through a phased evaluation of pre-season, in-season and end-of-season assortment plans.

To read the full list of recommendations or to download the EKN Assortment Management and Optimization report, click here. Be sure to check out how JustEnough Assortment Planning fully integrates with an innovative suite of retail planning solutions to help organizations create differentiated, customer-centric assortments that drive sales, reduce markdowns and increase margins.


Caroline Proctor

  11 Oct 2016 • By Caroline Proctor in Industry News

  

Top Technology Enablers and Strategies to Help Retailers Improve Merchandising Planning

The new EKN 2016 Assortment Management and Optimization report offers valuable insights about the state of assortment planning. Sponsored by JustEnough Software, the report is based on findings from a survey of about 50 North American retailers. In my last few posts, I touched on the most pressing challenges retailers face in optimizing their assortment planning processes, as well as areas they plan to invest in and capabilities they use or plan to use to realize these goals.

Today, I am going to spotlight the merchandise planning solutions retailers have already adopted and those they are currently upgrading, according to the report. Even among large, well-established brands, the use of legacy applications and spreadsheets to manage key merchandising functions is a fairly common practice. Retailers can address many legacy and traditional planning, assortment and allocation-related integration gaps by adopting a unified and integrated workflow-based platform guided by four strategic pillars: customer science, digital user interface and experience, integrated workflow and functional collaboration.

Visual merchandising, category management and space planning top the list for upgrades for nearly half of the retailers surveyed. More than 40% said they are currently making much-needed upgrades to their ERP-based or best-of-breed demand forecasting, distribution center replenishment and assortment optimization systems as a means to align location-specific financial and profitability plans with assortments that catch the eye of discerning shoppers.

While almost half the retailers surveyed indicate they possess updated systems for allocation, store replenishment, item master, analytics and space management, in reality, there are often large integration gaps between planning and execution applications and related workflows. Additionally, retailers are in the process of overhauling their pricing, promotions, markdown and planogram management technologies due to the fact that a large concentration of legacy or homegrown applications are close to or have reached end-of-life.

The EKN 2016 Assortment Management and Optimization report also found that 62% of retailers deployed their merchandising systems using a licensed on-premise model; however, one-third have adopted SaaS applications and managed-services models. SaaS applications have caught on for their flexible pricing terms and ease of scalability and future upgrades, while managed services offer an alternative for organizations with limited IT resources.

Read the full report here, and keep an eye out for next week's blog post highlighting the recommendations it makes to help retailers improve assortment planning and execution.


Caroline Proctor

  04 Oct 2016 • By Caroline Proctor in Industry News

  

Top Capabilities Retailers Are Leveraging For Deeper Integration Between Core Merchandising Areas

A couple of posts ago, we unveiled the top areas in which retailers plan to invest to improve overall business efficiency according to the EKN 2016 Assortment Management and Optimization report. The research, sponsored by JustEnough Software, found that nearly half of the 50 North American retailers surveyed intend to invest in assortment plan visualization in 2016. The second-biggest area of investment is in tools that support better integration of merchandise plans with assortment planning.

The report also evaluated which capabilities retailers most need for deeper integration between core merchandising areas. Currently, two-thirds of the organizations surveyed said integrated processes between assortment planning and allocation is the number-one capability needed for the creation and execution of effective assortments. But for many retailers, such processes are executed in silos instead of via a single, integrated process and platform.

To address this issue, allocation and assortment management teams need to share unit-level insights in real time, and allocation managers must have visibility into multiple, attribute-based plans and product images. Investing in a common platform that facilitates visibility and analysis of assortment information and related allocation plans is critical to ensuring that merchandising teams are able to analyze and summarize assortments by location and align them with allocation and financial targets.

The second most-cited capability retailers use is the integration of merchandise financial planning with assortment development. Yet, nearly 40% said they are currently unable to ensure the integration of merchandise financial planning with assortment development. When done correctly and within a single system, the integration of these two important aspects of retail planning gives retailers visibility throughout the planning process and builds a foundation for better, more informed decision-making.

Both of the above-mentioned approaches lead to decreased lead-times, fewer delayed orders, accurate inventories and a reduction in lost sales.

The EKN 2016 Assortment Management and Optimization report also looked at which capabilities retailers planned to use within the next 12 months to optimize their assortments. The two that topped the list are:

  • Reduce end-of-season on-hand inventory and related markdowns through optimum order quantities
  • Early order commitments, close to, and in-season adjustments

Both capabilities relate to finalizing assortment buys and managing an optimum order management process with suppliers. The retail industry must also accommodate scenarios where early commitments to the orders are made several weeks or months in advance. However, if a trend in demand shifts, retailers should have the ability to adjust orders either close to the trend taking place, or make in-season adjustments to avoid excess inventory and markdowns.

On next week’s blog post, we’ll cover the top merchandise planning technologies and strategies retailers are deploying to increase operational efficiencies, but check out the full EKN 2016 Assortment Management and Optimization report here.


Caroline Proctor

  27 Sep 2016 • By Caroline Proctor in Industry News

  

Aligning Marketing and Merchandising Practices to Meet the Needs of Buy-Now, Wear-Now Customers

The vast majority of shoppers don’t hesitate to rip the tags off new clothing purchases, according to retail research agency Verdict. Its June 2016 clothing survey found that nearly 86% of consumers say they purchase clothing they can wear right away, and 51.4% prefer not to buy clothing too far in advance of the upcoming season – a tricky proposition considering that most retailers launch their seasonal lines months before the weather turns.

Statistics like these suggest that traditional buying cycles no longer reflect the way that consumers like to shop for clothing. Unpredictable weather patterns certainly don’t help, but the buy-now-wear-now trend is more likely propelled by social media, which has shortened product lifecycles by giving users greater exposure to more styles and feeding a perpetual desire for new products.

However, the research found that slightly more than 75% of consumers believe apparel retailers offer sufficient transeasonal options. As a result, the Verdict article speculates that the culprit for weak sales is actually misguided marketing and merchandising strategies that have traditionally been aligned towards peak seasons, versus product selection. For example, a shopper who is looking for a sundress to wear to a Labor Day picnic in California will likely have to find what she’s looking for on the sale rack despite relatively warm weather.

Some retailers are thriving despite this buy-now-wear-now shift by aligning their product and merchandising strategies with consumer shopping behavior. Two standouts in this space include a contemporary British-style clothing company and an international Spanish clothing and accessories retailer. The former focuses on selling transeasonal ranges, while the latter’s in-store display strategy embraces stylish layering. The Spanish retailer’s vertically integrated supply chain provides the foundation to adapt quickly to weather changes via flexible phasing, reactive product drops and regular visual merchandising updates. A global luxury brand is also taking a forward-thinking approach by making its collections “seasonless” – i.e., available to buy immediately and referring to them as February and September, versus the more traditional Spring/Summer, Autumn/Winter labels.

To follow in the footsteps of advanced retailers, the article suggests that organizations should:

  • Ensure in-store and online inventory reflects current weather conditions
  • Showcase outfits that can be worn immediately in window displays
  • Use mannequins, hangers and online and social media channels to show how existing stock can be layered to accommodate changes in weather
  • Gear marketing strategies toward current fashion trends, versus upcoming seasons

Modifications to marketing and merchandising practices like those mentioned above will help retailers circumvent declining sales and customer satisfaction; however, the long-term fix requires fundamental changes to current product buying and phasing cycles to become more flexible, frequent and responsive. Such changes require the support of modern IT technologies. JustEnough’s fully integrated, highly scalable and agile suite of solutions support the end-to-end retail planning process, enabling businesses quickly adapt to trends and shifting customer buying behaviors in order to garner greater profits and market share. Contact us today to learn more.


Caroline Proctor

  20 Sep 2016 • By Caroline Proctor in Industry News

  

Integrating Assortment Planning and Allocation: The Key to Succeeding in a Dynamic, Customer Insights-Driven Retail Environment

The retail landscape is unquestionably complex: Selling channels are on the rise and customers expect nothing less than to find exactly what they are looking for in the right location and for a price they’re willing to pay. Technology and processes must offer a high degree of flexibility and efficiency for retailers to keep pace in a rapidly evolving industry shaped by shifting customer demand and short-lived trends.

The August issue of Apparel shed light on the urgent need for greater integration between two critical processes that, by and large, are disparately managed: planning and allocation. Advanced retailers are latching onto the concept that planning and execution should no longer be a one-way street; rather, bidirectional processes are critical to facilitate the back-and-forth flow of information.

Despite inherent omni-channel challenges, many retailers have made strides in breaking down planning silos. And it’s common for many organizations to now look at inventory as a single pot for meeting demand across all channels. However, unless further improvements are made to coordinating assortments and allocations, customer and demand trends can be missed, resulting in lost sales and lower customer satisfaction.

For real change to take effect, the Apparel article suggests that retailers must pair new technologies with updated organizational structures. Tearing down divides in merchandising is where it begins.

In a traditional retail organization, planners create assortments and then order inventory. A separate team decides what to do with it when it arrives. Today’s fast-paced omni-channel environment is forcing retailers to rethink this approach. Without clear visibility into both the assortment and allocation processes, retailers risk not being able to cater well to local and cross-channel demand trends. This can be avoided by enabling greater collaboration between planners and allocators, as well as providing a means for both sides of the house to analyze business conditions and revisit their plans based on the latest financial targets, sales activity and forecasts. Deciding how best to implement a checks-and-balances system is critical. Without a cohesive plan, determining how assortments from a shared inventory pot should flow into different channels is difficult, and reacting to sales trends outside the plan can result in brand inconsistencies that wind up confusing potential customers.

The modern merchandising process is seamless and iterative, starting with the financial plan and moving through to assortment planning and finally to allocation. Shared IT solutions enable all members of the retail team to reconcile plans at each step.

The article spotlighted outdoor retailer Kathmandu, which operates about 160 stores across Australia, New Zealand and the U.K. Looking for an integrated solution that would help it better manage its multichannel business, Kathmandu replaced its spreadsheet-based merchandising system with JustEnough Software for assortment planning, demand forecasting, inventory planning and replenishment. The JustEnough solution also fully integrates with its Microsoft Dynamic AX ERP system. In addition, Kathmandu is an early adopter of JustEnough’s pre-season and in-season planning capabilities, which enable its teams to execute to their original assortment plan while remaining flexible about how they replenish the style range once in season.

A new approach to end-to-end planning has resulted in significant gains for the retailer. Kathmandu reports that it has less excess inventory, which it attributes to starting each season with better plans based on more accurate forecasts. In fact, Kathmandu is holding about 10% less stock, and more of the stock it has on hand sells at full-planned margin. The retailer sold 20% less clearance items in the first half of 2016 and had 35% fewer clearance units on hand. Simultaneously, its sales went up just shy of 10% and profits increased 15.8%. Finally, the new system has provided Kathmandu with greater omni-channel customer insights, allowing it to use data from customer orders to stock its shelves appropriately and capitalize on trends it would have otherwise missed.

Success stories like Kathmandu’s underscore how this generation of retail planning systems help businesses embrace customer-centric merchandising, leveraging built-in analytics to tailor assortments to store clusters. As a result, companies can accommodate specific tastes of local markets and online consumers. However, as the article points out, it’s key to have an allocation strategy in place to distribute product based on how that particular item performs in certain locations, whether in-store or online.

Read the full article here, and contact us today to learn how JustEnough can help your organization successfully integrate its assortment planning and allocation processes.


Caroline Proctor

  13 Sep 2016 • By Caroline Proctor in Industry News

  

Retailers to Invest in Assortment Plan Visualization and Merchandising Integration Technology

Last week, we highlighted the top three challenges retailers must overcome to optimize their assortments according to the new EKN 2016 Assortment Management & Optimization report, sponsored by JustEnough Software.

To address these obstacles, close to half of the 50 North American retailers surveyed said they are focused on investing in assortment plan visualization technology this year for a couple of reasons: First, they lack adequate visibility into frequently changing multi-attribute assortment plans across various store formats. Second, there is a strong need for more effective retail store execution.

Retailers have typically lagged behind consumer product companies in adopting 3D visualization tools to help them plan better assortments and understand what their products will look like in distinct store settings – i.e., big-box, small-store and express-store formats. In order to adopt 3D visualization tools, retailers must loosen their grip on tedious 2D planogramming, which requires constant updates to the product selection, shelf-level facings and aisle placements.

The next biggest investment retailers plan to make is in solutions to help them better integrate their merchandise and assortment plans. Retailers either develop top-down or bottom-up merchandise plans. Such plans typically reside in separate modules within a software platform – or, they are created using spreadsheets. Either way, they are developed separately from the assortment plan, resulting in a disconnect in terms of overarching strategy, production and even marketing.

There is an immediate need for deeper integration between these two critical merchandising pillars so that a common vision and business objectives are followed by all stakeholders. Assortment plans that are linked more cohesively with targets in the merchandise financial plan will ultimately help the retailer achieve its revenue goals.

Next week on the blog, we’ll spotlight the key capabilities needed for deeper integration between assortments and core merchandising areas. In the meantime, check out the EKN 2016 Assortment Management & Optimization report here.


Caroline Proctor

  06 Sep 2016 • By Caroline Proctor in Industry News

  

Top Business Challenges Standing in the Way of Optimized Assortment Planning

Last week, we talked about the current state of assortment planning according to the EKN 2016 Assortment Management & Optimization report, which surveyed about 50 North American retailers.

Sponsored by JustEnough Software, the report also shed light on the top business challenges retailers face when it comes to creating the perfect assortment. Below is an overview of three major obstacles:

  • First, retailers find themselves in a tricky position: They need accurate demand forecasts to plan assortments more effectively for their stores and channels, but prevailing demand forecasts leave much to be desired. The average retail forecast accuracy stands at a mere 60% regardless of the forecast methodology used. In addition, legacy ERP and Excel-based forecasting tools do not possess capabilities that utilize heuristics and algorithms for identifying causal and predictive relationships between demand, assortment buys, price elasticity, sales, allocation and supply planning.

  • The second most pressing business challenge gets at the heart of the assortment planning process for one-third of the companies surveyed: Over the years, the growing range of complexity within retail categories has led to the adoption of assortment planning based on attributes like size, color and style, to name a few. However, many prominent retailers still do bulk top-down plans and universal year-over-year assortment planning without much emphasis on attribute-based segmentation of buys. While multi-attribute based planning helps address scale and assortment specificity, retailer migration towards attribute-based planning has been tepid at best.

  • Speed-to-market is the third biggest obstacle getting in the way of optimized assortment planning. To meet shifting consumer demand, many retailers are expanding their current assortments daily to add new products. However, assortment expansion introduces speed-to-market and lead-time risks as new products need to be backed by strong marketing, operational plans and field sales training. The average four-month design-deliver cycle time is far too long for both the retailer and its customers.

In the next blog post, we'll explore the top investment areas and strategic levers retailers can pull to overcome these assortment planning obstacles. Be sure to download the EKN 2016 Assortment Management & Optimization report here.


Caroline Proctor

  30 Aug 2016 • By Caroline Proctor in Industry News

  

The Current State of Assortment Planning

Getting assortments right is not a new challenge. Retailers have long struggled with the delicate balance between art and science to figure out the right assortment mix that appeals to not only its most loyal customers, but also new customers, resulting in higher sales, lower inventory costs and an improved shopping experience.

However, within the last few months, several new industry-wide obstacles have presented themselves, throwing a wrench in the way retailers approach assortment planning. Customer traffic in stores has waned, top-line revenue has become more unpredictable and the emergence of off-price sales channels in traditionally less price-sensitive segments like specialty, apparel and luxury have muddied the waters.

The new EKN 2016 Assortment Management & Optimization, sponsored by JustEnough Software, surveyed about 50 North American retailers. While the two predominate challenges standing in the way of perfect assortments are the fact that one in three retailers lack predictive tools to forecast demand and roughly the same percentage are unable to plan assortments around multiple product attributes such as size, color and others, the report offers insight into the current state of assortment management. Here is a high-level summary:

  • Retail executives and customers cite different reasons for why shoppers buy products from the retailer. From the retailer’s perspective, the top five drivers can be summed up in order of importance as: product quality, overall customer experience in store or online, product range, price and, finally, preferences. In contrast, millennials – arguably the most important consumer demographic at 75 million strong – put a premium on price, followed by discounts and promotions, product availability, staff friendliness and ease of navigating the store, according to EKN’s 2014 Millennial Survey. It’s clear young shoppers are focused on price – much more than retailers have estimated. An enhanced assortment can make the shopping experience more enjoyable for consumers, helping them see past the price tag and making them more loyal to the brand – which, in turn, can result in higher full-priced sales and profits.

  • Retailers are dogged with the decision to deploy a universal versus local assortment strategy. According to the report, 60% of all assortments are universal or applicable to a broad group of consumers. The reason for that is that 70% of retailers, on average, do mere macro-level geographic customer segmentation to plan targeted product lines and product varieties due to a lack of investment in deeper consumer preference and product affinity insights. This leads to generic assortments that don’t meet the needs of specific shopper tastes and lifestyles. However, adequate investments in local customer insights, category and item analysis and store/channel audits can empower retailers to develop more targeted and localized assortments or product lines and varieties.

  • Disparate and legacy assortment management do not allow for extensive in-process customer insight input. The EKN 2016 Assortment Management & Optimization survey found that 60% of retailers do not process customer-centric, store-level clustering for omni-channel assortments, leading to lower full-priced sales, inventory turns and sell-through of merchandise. Moreover, one-third of retailers do not have formalized processes to integrate assortment management with allocation execution for stores and other channels.

    From a planning and execution perspective, these two big merchandise management pillars of are largely handled separately. It’s no wonder the lack of integration between the two sides is harmful to the business. For instance, the coordination between open-to-buy, category and department-level assortment plans and precise allocation of all SKUs for both promoted and non-promoted items is done too late in the in-season planning process, leading to delayed shipments, out-of-stocks and fulfillment delays. The integration of merchandise financial plans and decisions with assortment strategies is critical to ensure that the retailer’s financial goals meet the product and sales goals location by location and channel by channel.

The bullets above describe the state of assortment management today. In the next blog post, we’ll dive deeper into the top business challenges retailers are facing as it relates to creating assortments that truly differentiate them from the competition and drive sales. You can view the full EKN 2016 Assortment Management & Optimization report here.

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