Can Accurate Assortment Planning lead to Customer Loyalty?
Consumers expect both online and instore experiences to be seamless, so ensuring a strong understanding of your consumers and their preferences can lead to a mutually beneficial exchange. Creating an assortment plan based on geographies, preferences and stores, can create a better understanding of individual stores and their customer preferences, so that an accurate plan can be set.
Figuring out what products to sell and what to leave out of an assortment requires fine tuning, and while there has been significant improvement in customer centric approaches, it is still extremely tricky. Assortment planning can be a critical component when it comes to the growth or shrinkage of a brand. Having the right product in the right place at the right time can be the difference between purchasing the product from you, or your competitor.
Assortment Planning processes vary across retailers and include updating the assortment, deleting slow-moving lines and adding new products in response to consumer demand or to accommodate offering from suppliers. Some retailers rely on human judgement and not enough on the data.
Assortment Planning is a challenging and demanding area, and the end result is a culmination of hard work across all areas of the business; from Concept Development and Creative Design to Visual Merchandising. Collaboration across the entire business is critical to success.
When it comes to Merchandising Planning and making decisions months ahead of the collection actually arriving in store, there are many factors to consider before making decisions. Retailers wish they had a crystal ball so that they could predict what customers will want, and what will sell early in a season at full price.
Providing the right information, at the right time, to the right people across a collaborative supply chain requires accuracy, and this information drives significant innovation in the business. One example is information provided to product designers on materials and product specifications when this information is re-used it can significantly reduce cost and time-to-market.
When you compare historical planning and using historical trends, it seems like a distant memory to what is required today in order to stay competitive. Previously we could rely on the ‘black box’ of human knowledge within the planning team, but today it has become more about utilising data across the business to ensure the right product is in the right store; based on customer preferences, sales information and market trends. The Next Generation of planning tools utilise Analytics, Big Data and IoT, with industry proven best practices and capabilities; to ensure you can manage your business using a complete view of assortment planning, and bringing profitable products to market faster.
Understanding customer preferences and local market preferences can build innovative and resilient ranges. The millennial generation, with its lower propensity for brand loyalty, limits the accuracy within Assortments, and traditional historic data models are no longer accurate.
New technologies like the Internet of Things (IoT), coupled with Product Lifecycle Management, enable a ‘Connected Store / Connected Products / Connected Supply Chain’ across a single platform; revolutionising the way retailers and brand owners connect with consumers around a brand, products and store experiences.
Many retailers do not have insight into what product attributes are driving sales, and why consumers or consumer segments prefer certain product attributes. A collaborative review enables up-to-date product development data, such as design aesthetics, suppliers and cost estimates, and merchandise assortment plans to be compared in real time.
Technology needs to be intuitive and served up in real time. Having a seamless integration of data sources, and providing this information in the context of what individuals in the business need, will ensure a smoother operation which is both effective and flexible. Innovative gains can be realised through a ‘single source’ of data for designers, brand managers, merchandise planners, buyers, external production teams and managers at the operational level.
Operational efficiency is critical but without customers, there is no business. Keeping customers at the center of your focus within the business is vital. Here are some areas to consider when looking at customer centricity:
- Collect customer sentiment and social media data
Retailers can begin to assess assortment effectiveness by looking beyond traditional metrics such as sales. Customer sentiment data can be incorporated with sales data to assess the quality of assortments. Social media data can also be leveraged to evaluate and compare how current marketplace trends align with assortment offerings. Allowing retailers to predict and respond to trends, instead of reactively responding once sales are impacted.
- Identify product attribute drivers
Once common attributes of product data are captured, sales and sentiment data can be analysed to determine which attributes are driving sales. These insights can be utilised to create more effective line plans, and retailers can begin to connect these attribute preferences to store clusters, further optimising and localising assortments.
- Create store clusters based on customer data
With a better view of key customers and customer segments, and where customers shop; insights can be leveraged to create more customer-focused store clusters. External sources can also be added in, such as weather, proximity to competitors and demographic trends.
Advanced retail solutions provide a holistic view across the Omni-channel and retailers can perform analysis across various areas such as channels, products, revenue, suppliers, costs, and various other performance metrics using the latest information for Assortments and Product Launches. This could lead to the Holy Grail of Merchandising.
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