Merchandise Planning and Allocation Provide Windows of Opportunity

JustEnough recently sponsored research by Boston Retail Partners into the current state of the industry around Merchandise Planning and Allocation and uncovered considerable windows of opportunity for retailers as they evolve to support unified commerce. Over this and the next several posts, I’ll be sharing the research findings and conclusions. I hope you enjoy this series of articles.

Here is part one:

Merchandise planning and allocation is the retail supply chain discipline to initially predict, and subsequently react to, changing consumer tastes and buying patterns. Merchandise planners and allocation specialists are responsible for both inventory budgets and determining the movement of merchandise to the stores. When done correctly, inventory moves, sales grow and profit margins reward. Get it wrong and the retailer sees markdowns, out of stocks, poor performance and an inventory bubble that needs to be digested through the selling cycle, consuming space, inventory dollars and profits. Even worse, while this is happening, retailers don’t have room or the budget to fill the racks with better-performing merchandise. Many selling seasons have been won or lost through planning and allocation decisions. The fact that many retailers now operate across multiple selling channels (online, in-store, mobile, etc.) further complicates these processes.

merchandising:

[mur-chuh n-dahy-zing]

noun

  1. the planning and promotion of sales by presenting a product to the right market at the proper time, by carrying organized, skillful advertising, using attractive displays, etc.
  2. the selection and display of goods in a retail outlet

As the challenges have grown, so have the technologies supporting retail merchandise specialists. Consumers expect a fast and efficient selling and delivery process, where the physical and digital selling channels converge to provide a cohesive shopping experience. These unified commerce shopping concepts have grown significantly, requiring retailers to put more functional capabilities in place than ever before. With dozens of emerging tools and techniques to support and expand business, it is an exciting time to be a retailer.

unified commerce:

The elimination of individual channel silos to offer a holistic customer experience across all customer touch points by leveraging a single commerce platform

Despite a significant growth in technological capabilities, adoption of a transparent cross-channel inventory has yet to become a reality at most retailers. While the desire is strong, replacing legacy systems, realigning processes, expanding associate visions and the incentives to do so have made the process challenging. Developing a strategy and roadmap for offering a real-time view of retail is now essential for success.

We believe business analytics will play a key role in this retail transformation. Evaluating and incorporating all available insights when inventory planning and allocation decisions are made greatly enhances the outcomes. For instance, merchants should be considering every data point available in the planning process, including: business intelligence, inventory movement, shopping behavior, customer relationship management (CRM), social media, clienteling data and customer demographics/segmentation.

Boston Retail Partners’ 2014 Merchandise Planning and Allocation Survey explores the current state of the industry and how technology is shaping retail capabilities, highlighting the priorities, processes, tools and strategies of today’s retailers. Further, it uncovers considerable windows of opportunity for retailers as they evolve into enhanced business models to support the growing need for unified commerce.

In the next article we’ll review the current state of merchandise planning and allocation.

Some of the best pratices identified in this year’s survey include:

  • 31% of retailers utilize a single inventory across channels
  • 26% of retailers have real-time visibility of in-store/online inventory
  • Nearly 50% of retailers have integrated business processes and systems across channels
  • 33% of retailers utilize CRM data to feed their business intelligence tools
  • Nearly 40% of retailers use social media to facilitate planning within product development