Top Capabilities Retailers Are Leveraging For Deeper Integration Between Core Merchandising Areas

A couple of posts ago, we unveiled the top areas in which retailers plan to invest to improve overall business efficiency according to the EKN 2016 Assortment Management and Optimization report. The research, sponsored by JustEnough Software, found that nearly half of the 50 North American retailers surveyed intend to invest in assortment plan visualization in 2016. The second-biggest area of investment is in tools that support better integration of merchandise plans with assortment planning.

The report also evaluated which capabilities retailers most need for deeper integration between core merchandising areas. Currently, two-thirds of the organizations surveyed said integrated processes between assortment planning and allocation is the number-one capability needed for the creation and execution of effective assortments. But for many retailers, such processes are executed in silos instead of via a single, integrated process and platform.

To address this issue, allocation and assortment management teams need to share unit-level insights in real time, and allocation managers must have visibility into multiple, attribute-based plans and product images. Investing in a common platform that facilitates visibility and analysis of assortment information and related allocation plans is critical to ensuring that merchandising teams are able to analyze and summarize assortments by location and align them with allocation and financial targets.

The second most-cited capability retailers use is the integration of merchandise financial planning with assortment development. Yet, nearly 40% said they are currently unable to ensure the integration of merchandise financial planning with assortment development. When done correctly and within a single system, the integration of these two important aspects of retail planning gives retailers visibility throughout the planning process and builds a foundation for better, more informed decision-making.

Both of the above-mentioned approaches lead to decreased lead-times, fewer delayed orders, accurate inventories and a reduction in lost sales.

The EKN 2016 Assortment Management and Optimization report also looked at which capabilities retailers planned to use within the next 12 months to optimize their assortments. The two that topped the list are:

  • Reduce end-of-season on-hand inventory and related markdowns through optimum order quantities
  • Early order commitments, close to, and in-season adjustments

Both capabilities relate to finalizing assortment buys and managing an optimum order management process with suppliers. The retail industry must also accommodate scenarios where early commitments to the orders are made several weeks or months in advance. However, if a trend in demand shifts, retailers should have the ability to adjust orders either close to the trend taking place, or make in-season adjustments to avoid excess inventory and markdowns.

On next week’s blog post, we’ll cover the top merchandise planning technologies and strategies retailers are deploying to increase operational efficiencies, but check out the full EKN 2016 Assortment Management and Optimization report here.