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 and Allocation.
Here is part four:
Social media has drastically altered our mode of communication in the last ten years. In its most basic form, social media provides a venue in which retailers can directly communicate with their universal customer base. Extending beyond initiating dialogue, it can also be an extremely powerful tool for collecting and using customer feedback to affect merchandise planning and allocation decisions. While this approach is still in its infancy for many retailers, the survey indicates a significant growth in the use of social media for merchandise planning purposes.
For the most part, the retailers surveyed are focusing their social media efforts on the mainstream digital outlets of Facebook, Twitter and Pinterest. The importance of escalating digital media pursuits is being recognized though, with more than half of retailers planning to expand their social media and ecommerce groups within the next year. Conversely, using social media for analytics will take a little longer with only 25% of retailers targeting this area within the next year and 33% planning to expand their social media analytical abilities within 1-3 years. Retailers are clearly placing emphasis on content output and brand development rather than on the gathering, analysis and utilization of social media input.
planning to expand their social media analytical abilities within 1-3 years
As the survey results indicate, retailers are just scratching the surface when it comes to leveraging social media content. The current use of social media data is limited, with only 39% using it for product development and only 35% using for promotional planning. However, this is up significantly from last year’s survey with a 550% increased use of social media for product development and a 190% increased use for promotional planning.
Only 8% of retailers incorporate social media data (including preferences, affinities, and trends) into business intelligence (BI) tools to utilize within the planning process.
Though motives behind the decision to utilize social media data vary by retailer, it is important to note the growing availability of tools that facilitate data mining of social media in the retail marketplace. With the integration of social login and e-commerce sites, retailers have been granted access to large quantities of customer information. For instance, upon logging on to a Website using social media credentials, customers consent to instantly provide retailers with demographics, preferences, product/brand likes and many other details about themselves. This customer insight results in large quantities of relevant data ripe for retailer reference. This data can help align demand, sell-through merchandise, localize assortments, and establish pricing and promotions.
While the number of retailers using social media data for planning rose significantly from last year to this year’s survey, we see few retailers planning to invest in this area within the next three. In our discussions with retailers within the industry, we have found that there is still education needed on the benefits of mining social media data and the solutions available to enable this.
Retailers can gain significant insight into the minds of the consumer by fully making use of the tools and reporting functionalities that are accessible today. Using reporting capabilities, much like market basket analysis, retailers can start identifying new trends and opportunities, as well as further support or reinforce current ones. As data connections and correlations are developed, the process can be further refined to help support predictive analytics based on a socially engaged customer base.