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It is no secret that retail has been very tough in recent years. With the global economy struggling with inflation, the future has become much harder to predict. The time is now to make changes to ways of working to continue to strategically grow. While technological development is advancing rapidly, retailers have a huge opportunity to capitalize on these advances and overcome these common pain points.
Paint Point One – Inventory
The highest cost to a retailer is its inventory. Naturally, there is a fine balance between having too much stock and not enough stock, ultimately leading to increases in markdowns and slow turns. Various levers can impact inventory position, and while many are out of the retailer’s control, applying a proactive approach can mitigate future issues.
If a quick decision is needed, there are various data sources, tools, and ad hoc Excel analysis to support fast action. However, the increased trading pressure requires more adjustments and decisions to be made and relying on manual processes takes much longer, while also carrying a considerable risk of human error.
Pain Point Two – Assortment
A customer’s first impression of a retailer is driven by the shopping space and assortment. Whether it is brick & mortar or e-commerce, the space must be cohesive, intuitive and guide the customer towards what they want and what they didn’t know they wanted before they entered the store. Planning the ideal assortment and flow of stock through the season is vital to converting customers.
Considering historical data alongside brand/category strategy to curate the assortment is a basic approach, but more needs to be done to progress assortment potential. Demand must be accurately forecasted to guide depth and breadth targets. Subtle changes to sourcing, production and fabrication may affect the buy. Pushes from the buying team to increase SKU count after an exciting day at market may mean adjustments must be made. Each slight adjustment from the first plan must be rolled up, reviewed, and considered within a holistic view of assortment composition by category, capitalizing on white space and ensuring cannibalization is not a risk.
There is often pressure from the buying teams to increase their buys, while planners want to reduce or flow the product through the season to feed demand. At the same time, projections must be compiled to commit to the buys and plan appropriately for the season. Getting the right depth and breadth is key!
Pain Point Three – Pricing
Pricing is always a hot topic but is now further pressurized by inflation impacting costs and the consumer wallet. We are in a highly competitive retail landscape that is extremely promotion heavy. Pricing changes are happening much more often, and manual processes are slow and unable to cope with the granular analysis now required to achieve optimal results. Multiple scenario changes are needed to understand margin implications, especially when categories are impacted that stretch across the chain.
Additionally, the management of pricing messaging must be aligned across multiple departments and planning areas. Key item pricing must be set well ahead of time for marketing to be able to build campaigns. When there is no central point to access plans across a business, ad hoc asks must lead the way and scrape time away from planning teams to provide analysis and recaps, instead of proactively driving business.
How can Integrated Planning solve these pain points?
Integrated Planning can be the transformational solution to deal with the above pain points. Retailers that have transitioned from analogue to digital operating models have a significant competitive advantage in the vastly more dynamic market of today. The sheer scale of change and the resulting need to take many more decisions much faster is beyond the capability of human beings and manual modelling.
Integrating your systems and processes offers many benefits, including increasing visibility, enabling seamless and connected scenario planning, facilitating predictive and prescriptive analytics, and applying data science to more accurately forecast demand and pricing. It's important to plan with the end in mind and ask yourself: in an ideal world, what do you want to be able to see and track? If not now, when?
At TPC, we have developed a vast network of experts whose approach is powered by our proven method. With years of experience in the retail industry, we offer strategic guidance for your planning needs. Contact us today to learn more about what integrated planning could look like for you.