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.
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
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.
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.
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.
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
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
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.
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:
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.
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.
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.
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.
Kathmandu is a leading outdoor and adventure brand in New Zealand, Australia and the UK with 160 stores and a growing eCommerce business offering apparel and outdoor equipment. They have a clear plan for growth in both established and international markets.
Kathmandu was challenged by a legacy forecasting and planning platform which wasn't meeting expectations and was beginning to constrain the company's growth. The team decided they needed a new solution.
Kathmandu had previously implemented Microsoft Dynamics AX, so when looking for a forecasting and planning solution, it seemed logical to turn to a Microsoft Dynamics partner. Microsoft recommended that Kathmandu reach out to JustEnough, a Microsoft Dynamics global retail partner, to learn about their solutions.
Once the Kathmandu team had thoroughly evaluated JustEnough, they found that the solution met the functional requirements and that JustEnough is highly regarded and used by many fashion brands worldwide. They decided to license JustEnough Assortment & Item Planning, Demand Forecasting, Inventory Planning and Replenishment
Shortly after going live, Kathmandu saw benefits in relation to the other systems they had been using, including a reduction in stock in stores by an average of 10%, improved pre-clearance inventory sell-through, increased stock turns, improved cash flow and reduced stock-outs.
Read the complete case study here.
Released by NRF on Oct 20, 2016
The NRF 2015 Holiday Consumer Spending Survey was designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey polled 7,276 consumers and was conducted for NRF by Prosper Insights & Analytics, October 5-13, 2015. The consumer poll has a margin of error of plus or minus 1.2 percentage points.
Top Findings of Consumers Surveyed
- Average spending per person reaches $805.65, comparable with spending in 2014 holiday season ($802.45).
- Spending on gifts for family members will total $462.95, up from $458.75 last year, and a survey high.
- Almost half of holiday shopping, consisting of browsing and buying, will be done online: average consumers say 46 percent of their shopping (both browsing and buying) this holiday season will be conducted online, up from 44 percent last year.
- 21.4 percent of smartphone owners will use their device to purchase holiday merchandise this year, the highest seen since NRF first asked in 2011.
- Nearly half (46.7%) said free shipping/shipping promotions are important factors in their decision on where to shop
- 55.8 percent of holiday shoppers will splurge on themselves and/or others for non-gift items, and will spend an average of $131.59, up from $126.37 last year.
Read the full article here.
Released by NRF on Oct 8, 2016
The National Retail Federation announced it expects sales in November and December (excluding autos, gas and restaurant sales) to increase a solid 3.7 percent to $630.5 billion — significantly higher than the 10-year average of 2.5 percent. Holiday sales in 2015 are expected to represent approximately 19 percent of the retail industry’s annual sales of $3.2 trillion. Additionally, NRF is forecasting online sales to increase between 6 and 8 percent to as much as $105 billion.
“With several months of solid retail sales behind us, we’re heading into the all-important holiday season fully expecting to see healthy growth,” said NRF President and CEO Matthew Shay. “However, while economic indicators have improved in several areas, Americans remain somewhat torn between their desire and their ability to spend; the fact remains consumers still have the weight of the economy on their minds, further explaining the complex retail spending environment we are seeing right now. We expect families to spend prudently and deliberately, though still less constrained than what we saw even two years ago.”
“Potential disruptions from yet another government shutdown in mid-December and a slower pace of job creation and income growth are just a few key factors that will impact holiday shoppers’ spending this year,” continued Shay. “Price, value and even timing will all play a role in how, when, where and why people shop over the holiday season. Retailers will be competitive not only on price, but on digital initiatives, store hours, product offerings and much more.”
Holiday sales in 2014 increased 4.1 percent over the previous year.
"Similar to last year in the sense we’re coming off a rather disappointing first half, this holiday season brings to light several crosscurrents that still exist for American households,” said NRF Chief Economist Jack Kleinhenz. “While confidence data is encouraging, slower job growth in 2015, deflationary retail prices and the mix of consumer spending somewhat shifting toward big ticket items and services, as well as the wild card in our government spending debates, will all contribute to the slower growth rate of sales expected for the holiday season.”
“All said, there’s no reason to doubt that we will see solid retail sales growth in the final two months of the year,” continued Kleinhenz.
Read the full article here.