Earlier this month, Groupsoft hosted a webinar with Sahir Anand, vice president and principal retail analyst for the Aberdeen Group, on “Merchandising Optimization in the Digital Age.” We expect to have a streaming version of the webinar available in the near future, but in the meantime we wanted to share some of the highlights here.
Sahir had some valid points to share about the pressures retailers face in the current market climate based on his research. The real market pain points facing retailers fall into four basic categories:
- Personalization
- Unit-level merchandising and process management
- Centralized merchandise data integration
- Top-down and Bottom-up merchandise planning
Over the next few blog entries, we will talk about each of these challenges in turn, starting with personalization.
For today’s retailer, personalization is what allows retailers to attract more customers, and retain them. And personalization isn’t just for the in-store experience, but it has to cross all retail channels. Customers have
come to expect the same rich, multimedia experience whether they are shopping online or in the store, and they expect that experience to transfer between outlets. However, according to Aberdeen research, of 100 senior retail executives surveyed across various industries – apparel, grocery and department stores – 76 percent of retailers do not possess the technology tools or the business processes to handle multichannel personalization; e.g., they cannot execute web, catalog or special orders from stores.
For the in-store experience, personalization includes identifying customer preferences, merchandising, and promotions, extending right on through to the actual sale and then ongoing customer contact. But then that personalized experience need to expand to other channels, such as catalog or online and even mobile shopping. Consumers have come to expect personalization across all channels, not just online commerce where it’s easier to deliver. Increasing personalization will increase in-store profits, but it also requires and understanding of what impact merchandising is making on the shelf. The Aberdeen research also shows that 27 percent of retailers are looking to add interactive multimedia technology to their stores, such as computer kiosks, to help bring that multichannel experience to the store experience.
Using centralized data gathering and analytics can reveal the impact merchandising is having on personalization on the store shelves. Assortment planning is being driven by personalization, and that means using analytics to reveal customer preferences to dictate local assortment; structuring promotions that drive faster stock replenishment; and better customer connections to build customer loyalty. With the right intelligence, retailers can optimize their in-store SKUs and personalized presentation to minimize their on-site inventory while promoting greater product availability through other channels, such as online. The end result is more efficient use of shelf space while improving the customer experience.
The key is regionalization and mapping stocking strategies to your local demographics. In the next blog entry, we will explore what Sahir and his colleagues have to say about unit-level merchandising for regional storefronts and how more efficient process management can increase sales and margins.
You can view the full webcast on “Merchandising Optimization in the Digital Age” here.
