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Caroline Proctor

  29 Dec 2015 • By Caroline Proctor in Opinions

  

Advanced Analytics Support Better Omni-Channel Decision Making

This is the fifth article in our series based on a research report JustEnough recently sponsored with Boston Retail Partners into the current state of the industry around Merchandise Planning which uncovered strategies that retailers can focus on to enable effective planning in today’s omni-channel world.

We will continue to look into the elements the survey found that retailers can focus on to enable effective planning in an omni-channel world. Please contact us, if you would like to learn more about how JustEnough solutions are helping leading retailers to successfully plan for their omni-channel operations.

Advanced analytics

Improving analytics is the top planning priority for retailers (Exhibit 10). Retailers continue to focus on analytics, as it was a top priority from last year’s survey as well.

Exhibit 10: Top planning priorities

bl-brp-2015-survey-exhibit-10
 

Analytics serve as an important tool in assisting retailers to find and interpret meaningful patterns in customer and inventory data to support decision-making. Insight into customer demand, price sensitivity, reaction to promotions, demographics and more are key to drive merchandise plans and actions that maximize profitability. This is especially critical in an omni-channel environment, as understanding the preferences of disparate customer groups across different channels becomes more complicated.

Analytics provide visibility into sales performance by channel, assortment, and item, making it extremely valuable for strategic decisions. As omni-channel integration and planning become the norm, the analysis required to support strategic decisions becomes more complex and data intensive. It is becoming essential for retailers to broaden their analytical capabilities to effectively address these complicated quantitative decisions. For example, at the convergence of social media and advanced analytics are emerging tools such as scrapers that collect and analyze website activity to help identify trends and missed opportunities.

Despite readily available data, retailers are still often challenged to successfully understand and utilize analytics. Among most organizations, the ability to leverage analytics to improve business performance lags intent. This gap can be attributed to various environmental factors that are currently prevalent among retail businesses.

The ability to execute upon advanced analytical capabilities is limited primarily by tools, data and internal skills. The tools utilized by many retailers lack the consistent capability to answer today’s critical, forward looking business questions efficiently with supporting data, transparency and trust in the results. Many organizations also deploy measures without a comprehensive enterprise analytics strategy, resulting in both under-utilization of capabilities and an absence of the requisite knowledge of existing tools and data to ensure their efficient use.

Implementation of a successful omni-channel approach undeniably requires organizational alignment across all business segments, and analytics are not exempt. A large number of today’s organizations have capabilities and processes that are inconsistent across functions. Without organizational alignment, it is difficult to maximize the benefits that big data can bring to omni-channel performance. Three-quarters of the respondents currently utilize advanced analytics in merchandise planning while only 20% utilize it within omni-channel planning (Exhibit 11).

Exhibit 11: Advanced analytics use

bl-brp-2015-survey-exhibit-11

You can read the complete BRP 2015 Annual Merchandising Planning Report here.


Caroline Proctor

  22 Dec 2015 • By Caroline Proctor in Opinions

  

Leverage Omni-Channel Data to Enhance Customer Insight

This is the fourth article in our series based on a research report JustEnough recently sponsored with Boston Retail Partners into the current state of the industry around Merchandise Planning which uncovered strategies that retailers can focus on to enable effective planning in today’s omni-channel world. 

We will continue to look into the elements the survey found that retailers can focus on to enable effective planning in an omni-channel world. Please contact us, if you would like to learn more about how JustEnough solutions are helping leading retailers to successfully plan for their omni-channel operations.

Here is part four:

Enhanced customer insight

The quantity of data available to retailers has never been greater. Retailers have access to more customer, enterprise and public data than ever before. Customers are increasingly interacting with retailers in a highly digital manner via online shopping and social media. These interactions produce valuable sets of data that can be instrumental when predicting demand and informing buying and planning decisions. Knowing the customer better than the competition empowers retailers to create personalized promotions and marketing campaigns to drive sales and enhance customer loyalty.

Social media provides retailers with unprecedented visibility into their customer base. It provides a venue in which retailers can directly communicate with their customers and it is an extremely powerful tool for collecting and using customer insights to improve planning decisions. Retailers can understand who the customer is, what she wants, when and where she wants it, and even why she wants it based on social media postings and feedback.

Social media analytics refers to the assessment, examination and interpretation of the interactions and associations of people, topics and ideas among social media sources such as Facebook, Twitter, Google+ and Instagram. Observing and analyzing social media discussions and trends across many individuals and communities is often referred to as “crowdsourcing.” Social media crowdsourcing is a powerful tool that can be used to discern customer sentiment about a retailer’s products and services and offers retailers the ability to identify customer shopping trends. Retailers are beginning to access this plethora of customer insight available for merchandise planning purposes.

The challenge with social media analytics is that it is still relatively new. Therefore, there are very few “tried and true” tools and best practices for retailers to use as a guide. But with the benefits of customer insight to help align demand, sell-through merchandise, localize assortments and target pricing and promotions, the value of social media analytics can be significant.

Currently 71% of retailers indicate that they capture customer feedback via social media. However, retailers are still just scratching the surface when it comes to leveraging social media content for planning purposes.

Product development remains the biggest area for social media data utilization with 23% currently utilizing it and 29% planning to use within two years (Exhibit 8). It is interesting that many retailers don’t see the value in utilizing social media data for allocation assistance (only 31% have any plans for utilizing social media data in assisting with allocation), as understanding customer insight would seem to be important for re-allocating merchandise.

Exhibit 8: Social media to facilitate planning

bl-brp-2015-survey-exhibit-8

More than half of the retailers surveyed utilize social media data for competitive shopping while only 41% utilize social media data for pre-season planning (Exhibit 9).

Exhibit 9: Social media data usage

bl-brp-2015-survey-exhibit-9

Social media represents a huge opportunity for retailers to be more customer-focused in their planning. Driving merchandise decisions based on customer desires and needs should improve the chances that retailers will buy and stock the merchandise that customers want to buy.

You can read the complete BRP 2015 Annual Merchandising Planning Report here.


Caroline Proctor

  15 Dec 2015 • By Caroline Proctor in Industry News

  

The Customer is the Driver of the Omni-Channel World

The Robin Report recently published an interesting article about the face of today’s omni-channel customer. Some of the interesting observations include: 

  • Experience and Possession. She is interested in the experience of shopping and possession. While hardly oblivious to price, price is only one ingredient in what adds up to a satisfying retail experience. Quality, brand, value—and a pleasing and even entertaining path to purchase are what are important to her.

  • Shrinking Store Visits. For the omni-shopper, the path to purchase leads more and more to the stores on Main Street and in the mall—the venues that continue to provide her with the experience she wants. The thing is, that list of stores is dwindling. The more she shops online, the more the omni-shopper narrows her choice of stores to visit.

  • Loyalty versus Commitment. Two years ago, the great fear stalking the corridors of retail was showrooming: the prospect of frictionless shopping on the Internet driving prices down as far as they could go, with stores serving simply as test-drive facilities. Something like the opposite has happened. Ecommerce is not a race to the bottom. While some goods and services (the latter, in some cases, of necessity: think of digital music) are taking share online, both by category and in bulk, the store continues to attract consumers for service, for socializing and, perhaps most surprising, for inventory. 

  • She Wants it Now. Retailers can thrive only by concentrating on the omni-shopper herself and the way she uses channels, devices, technology and indeed her own savvy as means to an end— in short, the path to purchase ending in a satisfying experience, as much as the purchase itself in a box with a receipt. This also is the way to obtain her commitment—a commitment based on trust to deliver merchandise swiftly, safely and in a digital and physical environment that the consumer finds welcoming. 

You can read the complete article here.  


Caroline Proctor

  08 Dec 2015 • By Caroline Proctor in Opinions

  

Break Down Silos and Create Synergies with Organizational Rationalization

This is the third article in our series based on a research report JustEnough recently sponsored with Boston Retail Partners into the current state of the industry around Merchandise Planning which uncovered strategies that retailers can focus on to enable effective planning in today's omni-channel world.

We will now continue to look into the elements the survey found that retailers can focus on to enable effective planning in an omni-channel world. Please contact us, if you would like to learn more about how JustEnough solutions are helping leading retailers to successfully plan for their omni-channel operations.

Organizational rationalization

Retailers are making strides within the organization as more than half of those surveyed have already integrated their planning processes, organizations and systems across channels. Unfortunately, most retailers that have completed their integration initiatives indicate there is need for improvement (Exhibit 7). This issue may be a symptom of the older systems that many retailers still operate that cannot truly support omni-channel operations or a unified organization. In many cases, this may be a “faux” integration with manual processes, conflicting teams or technology patched together to reach across channels.

Exhibit 7: Integration Initiatives

bl-brp-2015-survey-exhibit-7

Pursuing an omni-channel inventory strategy presents retailers with the opportunity to break down organizational silos and take advantage of synergies across the enterprise. In some instances, this may involve consolidating disparate teams into one unified team and eliminating redundancies. With advanced applications doing much of the heavy lifting, employees are able to take advantage of the data to formulate and execute better strategies. The integration of planning systems across channels gives planners enhanced insights, which enable them to make better strategic recommendations with respect to price, promotion and inventory.

You can read the complete BRP 2015 Annual Merchandising Planning Report here.


Caroline Proctor

  04 Dec 2015 • By Caroline Proctor in Industry News

  

NRF Economist Addresses Increasing Inventory to Sales Ratio

NRF recently reported on the retail inventory balancing act and if there is anything to worry about as inventory to sales ratios have recently been increasing. They reported that:

Through an economic lens, large changes in inventories signal changes in spending and thus are a potential indicator of future business activity. For example, a higher-than-normal level of inventories relative to sales can signal that the economy is slowing down. I don’t believe we can currently infer that the economy is slowing down. Instead, the flood of merchandise that came into the country after the West Coast port slowdown was resolved earlier this year — coupled with slow sales because of bad winter weather — caused inventories to increase not just for retailers but also for other businesses. Meanwhile, it remains unclear what impact this summer’s slowdown in job growth had on sales and inventories and whether the recent increase in consumer spending on services, vacations and restaurant meals is temporary. Nonetheless, it is unlikely that the economy is pulling back as a result of an inventory buildup, especially since the Bureau of Economic Analysis revised third-quarter growth upward to 2.1 percent from its initial estimate of 1.5 percent, indicating that the consumer sector has been one of the primary areas of overall economic growth.

2014, 2015 Monthly Inventory to Retail Sales Ratios and year-over-year Change in Inventories

You can read the complete article here.


Caroline Proctor

  01 Dec 2015 • By Caroline Proctor in Opinions

  

Create Holistic Customer Experiences through Seamless Channel Integration

This is the second article in our series based on a research report JustEnough recently sponsored with Boston Retail Partners into the current state of the industry around Merchandise Planning which uncovered strategies that retailers can focus on to enable effective planning in today’s omni-channel world.

We will now begin to look into the elements the survey found that retailers can focus on to enable effective planning in an omni-channel world. Please contact us, if you would like to learn more about how JustEnough solutions are helping leading retailers to successfully plan for their omni-channel operations. 

Seamless channel integration 

One of retailers’ key concerns is the integration of people, processes and technology across channels to enable a seamless omni-channel experience. Despite progress, there are still many retailers that plan channels individually and maintain separate assortments and inventories for different channels. Brickand-mortar teams largely operate independently from e-commerce teams and vice versa. There are still opportunities for better integration across channels – and the people, processes and technology to support them – to enable the expected holistic customer experience.

Planning 

To keep up with the competition, most organizations are working towards planning across channels. Some progress has been made, although 60% of retailers still plan for brick and mortar separately from other channels (Exhibit 4)

Exhibit 4: Current channel planning

Current-channel-planning

Assortments

Currently, less than a quarter of the respondents offer the same assortment across channels and the majority of retailers still need to eliminate the separate silos within the merchandising organization (Exhibit 5). 

Exhibit 5: Separate channel assortments

Formal -planning processes

Inventory 

Inventory management across channels has made progress – this year 49% of the respondents vs. 69% last year maintain separate inventory across channels and this year 37% vs. last year’s 31% had no separation of inventory across channels (Exhibit 6). 

Exhibit 6: Inventory management across channels


 


Some progress is being made in the integration of people, processes and technology; however, many retailers have more work to do to fully integrate the organizational aspects of the planning process. 

You can read the complete BRP 2015 Annual Merchandising Planning Report here.


Caroline Proctor

  24 Nov 2015 • By Caroline Proctor in Opinions

  

Boston Retail Partners Annual Merchandising Planning Survey

JustEnough recently sponsored Boston Retail Partners annual research into the current state of the industry around Merchandise Planning which uncovered strategies that retailers can focus on to enable effective planning in today's omni-channel world.

Over this and the next several posts, I'll be sharing the research findings and conclusions. I hope you enjoy this series of articles. Please contact us, if you would like to learn more about how JustEnough solutions are helping leading retailers to successfully plan for their omni-channel operations.

Here is part one:

Introduction

Today's retailers are wrestling with a myriad of business and IT issues. Adding to the already long list, current planning systems are out-of-date and don't effectively address today's requirements for an omni-channel planning environment. Most retailers find their current planning applications are ineffective and can't support the complex analysis required to optimize planning decisions and ultimately meet customer demand. The good news is that most retailers realize this and more than half of retailers are planning to upgrade or replace their planning applications within two years (Exhibit 1).

Exhibit 1: Application Plans


Many existing planning systems were developed and installed in the late 1990s as the Y2K issue forced numerous retailers to update their technology base. Fast-forward twenty years and many retailers are still utilizing those same systems with the same configurations.

Most retailers have at least some planning systems in place but the rapid changes in the industry – as e-commerce and mobile commerce have become mainstream and today's customer expects the ability to shop anywhere at any time – have eclipsed the abilities of these planning systems.

This environment sets the stage for Boston Retail Partners' 2015 Merchandise Planning Benchmark Survey to explore the current state of retail planning and to identify and understand retailers' priorities as they attempt to meet the needs of a 21st century customer while constrained by 20th century technology.

Planning in an omni-channel world

The traditional planning process is conceptually straightforward: identify what to sell, to whom to sell it, at what price to sell it and then ensure the product is where it needs to be on time. This is simple in concept but challenging in execution. With customers looking for a seamless experience across all channels, it becomes even more challenging to plan and manage effectively. Today's consumer demands an omni-channel retail experience offered in real-time, whereby all retail locations – whether physical or virtual – converge to provide a fast, easy, unified shopping experience.

Fortunately, there are technology tools available in the marketplace to support advanced planning that incorporates customer insights and trends, cross-channel integration, competitive information, and real-time data. However, technology is only a part of the solution – to truly offer customers a seamless experience across all channels requires alignment of the organization and processes to support the technology solution.

Step 1: Formalize planning processes

The value added by employing formal planning processes is not going unnoticed in today's retail market. Advances in planning tools support a wide range of merchandising and planning capabilities and have significantly expanded to support the omni-channel model of retail.

Of the retailers surveyed, nearly all have a formalized merchandise planning process (91% vs. 89% last year) (Exhibit 2). Formalized assortment planning processes are also increasing with half the retailers indicating a formal assortment planning process last year and nearly three-quarters this year.

Exhibit 2: Formal Planning Processes


For most retailers, planning is a cyclical endeavor repeating tasks on a weekly, monthly, quarterly and annual basis. These cycles are completed multiple times throughout the planning organization and often independently for various channels – so the e-commerce planning team is often performing the same exercises as the planning team managing brick and mortar.

Pursuing an omni-channel model requires retailers to break out of these duplicated planning cycles and silos to share insights across the enterprise and enable themselves to react to trends in real-time. Initially, retailers must plan sales across channels and allow those forecasts to trickle down to a more granular level. This allows retailers to take advantage of synergies across their business channels and potentially save capital on inventory investments. Retailers should recognize that this requires their inventory to be more flexible as units earmarked for one channel may end up fulfilling sales in another. In season, regular cross-channel meetings allow planners to react to trends and revise strategies to ensure that inventory ends up in the right place, at the right time and at the right price.

Step 2: Align the organization

Retailers are making strides in the integration necessary across the organization to provide customers a seamless experience across channels. The survey revealed increased integration across omni-channel planning with about half of the retailers having already implemented these initiatives (although they need improvement) and many have plans to integrate within two years (Exhibit 3).

Exhibit 3: Omni-Channel Planning Initiatives


Part of breaking down planning silos includes disrupting the traditional alignment of planning teams. Historically, planning teams have been aligned around product categories by channel. Unfortunately, this does not work with the omni-channel model of retail in which sales are planned across the enterprise. It also creates misaligned goals where a planner puts the success of his or her channel ahead of the success of the company as a whole. Further, valuable lessons learned in one channel may not be shared with, and benefit, another. In order to achieve the synergies of omni-channel retail, planning organizations must be realigned, and sometimes consolidated, in order to create a more proactive and nimble organization.

Step 3: Implement the right technology

As mentioned above, many retailers plan to upgrade their applications within the next two years (See Exhibit 1). This year, 63% of retailers are planning to upgrade their merchandise planning application vs. 22% of the respondents last year. This represents a huge increase in planned upgrades and validates the importance of advanced planning tools.

Retailers must invest in modern merchandise planning applications to achieve omni-channel success. The increased complexity of a collection of homegrown and off-the-shelf apps, supplemented with spreadsheets, creates multiple versions of the truth, making it challenging for retailers to remain competitive. Modern omni-channel applications permit retailers to forecast cross-channel demand, while managing pricing, promotion and inventory at a more granular level. This, integrated with predictive analytics and customer insights, creates an environment in which omni-channel planning teams can excel.

Once the improved processes, organization and technology are in place, retailers can focus on the following elements to enable effective planning in an omni-channel world:

  • Seamless channel integration
  • Organizational rationalization
  • Enhanced customer insight
  • Advanced analytics
  • A holistic pricing strategy
  • The right technology tools

In the next article, we'll begin to review these elements.

You can read the complete BRP 2015 Annual Merchandising Planning Report here.


Caroline Proctor

  17 Nov 2015 • By Caroline Proctor in Industry News

  

Majority of Shoppers Prefer to be Proactively Targeted with Discounts and Deals

The Wall Street Journal recently published an interesting article based on survey data from Accenture. The article highlighted some interesting trends around shoppers’ desire for promotions and discounts and their plans for cross-channel shopping.

The WSJ reported that overall consumers have remained frugal about their shopping habits since the recession and retailers are likely to cater to shoppers’ eyes for a good deal. Accenture found that 87% of consumers are typically persuaded by discounts of 20% or more to buy an item.

Retailers and brands also have a lot to gain from effective targeting of consumers, with 56% of shoppers in Accenture’s study saying they prefer to be targeted proactively by retailers and brands with discounts and deals. Only 20% said they prefer to seek out deals themselves. More than half of U.S. consumers are also willing to share their personal information with retailers in exchange for personalized offers, up from 33% a year earlier. Advertisers are increasingly looking for more information about potential customers in order to better target audiences that might be interested in their products and ultimately improve the effectiveness of their ad dollars. Despite concerns about cybersecurity and spam mail, Accenture’s research suggests that customers are still willing to share their information with brands they trust if they get something worthwhile in return.

Just over half of respondents said they’d prefer to shop online rather than in-store when a retailer has both options. And 69 percent of U.S. shoppers are likely to participate in “webrooming” or shopping for products online before going to a physical store to buy their product, while 65% indicated they’re likely to participate in “showrooming” to visit a store to see the product in person before buying it online.

You can read the complete article here.

Please contact us, if you would like to learn more about our omni-channel planning suite of solutions and how our Promotion Management solution can help you to better plan, target and execute more effective promotions.


Caroline Proctor

  10 Nov 2015 • By Caroline Proctor in Justenough News

  

The Holy Grail of Omni-Channel Merchandising

Check out the lead article in the most recent issue of JustEnough’s InDemand Newsletter and click here to read the entire newsletter.

JustEnough recently sponsored an industry survey and research report with EKN on the state of omni-channel merchandising. The report found that while retailers are making great strides with customer-centricity in the functional areas of marketing and customer service, merchandising has not made the same progress. This isn’t that surprising as merchandising is about products, and for many retailers it is a big part of their traditionally product-centric approach to business.

In the new digital and omni-channel age of retail, merchandising is undergoing several radical transformations:

  • From being largely siloed to being more integrated with demand forecasts, inventory planning, product innovation and dynamic channel execution needs (i.e. pricing, promotions, space etc.)
  • From being focused on larger segments of customers based on demographics and purchase similarities (products, baskets, trips) to being focused on micro-segments of customers based on customer lifetime value and lifestyle needs
  • From being a product-centric function to being one that is customer-centric
  • From being largely dependent on merchant intuition to being one that is driven largely by customer insight

You are invited to download this free report and view the free infographic to learn about priority initiatives, challenges and technology trends for 2015 and beyond for customer-centric merchandising/assortment areas related to business processes, technology and strategies where best-in-class retailers focus.


Caroline Proctor

  05 Nov 2015 • By Caroline Proctor in Industry News

  

NRF Releases its 2015 Holiday Survival Guide

NRF recently released its Retail Holiday Survival Guide which includes holiday forecasts, consumer trends and historical retail sales data. Here are some frequently asked questions about this NRF Guide. I hope this NRF information helps you not only survive, but thrive, in this holiday season.

What is NRF's prediction for holiday sales growth this year?

NRF is projecting 2015 holiday sales to rise 3.7 percent.

How much have holiday sales grown in the last few years?

Holiday sales in 2014 increased 4.1 percent and 2.7 percent in both 2013 and 2012. During a booming economy holiday sales could grow as much as 6.8 percent as they did in 2004, or could actually decrease during an economic downturn as they did in 2008 when the industry reported sales dropped 4.6 percent over the previous year. On average, holiday sales have increased 2.5 percent for the last 10 years.

What percentage of annual sales do the holidays represent?

For some retailers, the holiday season can represent as much as 30 percent of annual sales with jewelry stores reporting the highest percentage, accounting for approximately 26 percent of their sales during the 2014 holiday season. Overall last year holiday sales represented 20 percent of total retail industry sales. For historical sales by sector see page 5.

What is NRF's prediction for online holiday sales growth this year?

NRF projects online holiday sales to increase between 6 and 8 percent to as much as $105 billion during the months of November and December. Online holiday sales in 2014 increased 5.8 percent, according to NRF. What factors are used to calculate NRF's online holiday forecast? NRF's estimates are based on data collected by the U.S. Department of Commerce, the Federal Reserve, the U.S. Census, the Conference Board and NRF';s own calculations. These estimates include personal income and spending, consumer credit, consumer confidence and previous monthly retail reports.

Why are many retailers putting holiday merchandise on the shelves so early?

Each year about 40 percent of consumers begin their holiday shopping before Halloween. While most retailers do not begin holiday advertising until at least October or November, they recognize that many people like shopping early to spread out spending. As a result, many retailers are putting holiday merchandise on the shelves in September — specifically decorations and greeting cards, which many people buy months in advance.

Is Black Friday the busiest shopping day of the year?

ShopperTrak, which counts foot traffic at malls, reports that Black Friday is the busiest shopping day of the year, followed by "Super Saturday" and the Sunday before Christmas. NRF research found in 2014 that over the entire holiday weekend, beginning Thanksgiving Day, Black Friday was the busiest day with more than 87 million shoppers having shopped in stores or online that day.

Check out the full NRF 2015 Holiday Survival Guide here.

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