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.