In today’s changing market dynamics, the retail business is getting more competitive by the day. Increasing competition by online marketplaces, along with evolving consumer expectations and shopping patterns are making the category management decisions more complex. As customers’ options increase, so do their expectations. Category management and merchandise planning are at the core of retailing. Assortment planning decisions made by these teams need to be more dynamic and localized as manual analysis based on broad assumptions and averages do not suffice anymore. Managing complexity and maintaining agility becomes the main concern for retailers.
Here are the vital capabilities for surviving in the new world of retail:
1) Digital Transformation
Digital transformation is taking its place on the agendas of the CEOs and CIOs across the board. While it has been a trending topic across retailers for the last few years, the recent COVID-19 crisis has proven that this is not a “nice-to-have”, but indeed a “must-have” capability in order to stay alive. In the context of category management, this means having integrated workflows between financial planning, assortment planning, initial allocation, replenishment, promotions planning, and markdown optimization.
2) Early Detection
Implications of the recent crisis on planning, buying, and distributing products have once again highlighted the importance of early detection and fast decision-making processes while understanding the inter-dependencies across different functional teams. For faster-decision making, category managers need automated diagnostics such as alerts on delayed receipts, insights into under-performing stores and products, variations in sales performance across channels, and the impact of competitor price actions on their demand.
3) Data Analytics & Automation
In today’s competitive landscape, almost every retailer is competing with Amazon, Alibaba, or some other digital marketplaces and/or they participate in it. Keep in mind these companies are built on data analytics and thrive on automation. High-performing retailers with proven track records are utilizing advanced analytics, artificial intelligence, and automation in driving their planning decisions. They are working with big data to identify and optimize opportunities across different store formats, and different customer segments. They turn insights into more customized product and price offerings and take actions in minutes rather than in hours or in days.
Retailers understand they have to keep learning, and evolving. Legacy systems supporting siloed decision-making are not keeping up with this new way of doing business. They need advanced solutions with machine learning and automation to detect and execute opportunities for localized assortments.
4) Localized Assortment Planning
Fashion or specialty retailers selling long lead time, short life-cycle products, need to minimize their risk by making the right decisions upfront or detect risks and opportunities as soon as products start selling. How much to buy and where to position the goods that have 6, or 8 weeks of prime selling period have huge impacts on profitability. Since these products do not have their own sales history, buying and allocation decisions need to take similar items as reference.
Automating similar item selection through attributes or visual recognition brings efficiency and standardization to one of the crucial steps in buy planning. However, finding the right similar product does not necessarily guarantee the right buy quantity. Through machine learning technology, next-generation solutions incorporate factors such as stock-out adjustments, normalizing weather effects, and accounting for promotions and markdowns.
Grocery chains or mass merchants selling long life-cycle products have the advantage of learning from sales data and adjusting the assortments as they gain insights on how customers are reacting. Managing new product introduction, modeling lifecycle, and the substitution effects, and automating the delisting decisions are among the decisions ripe for use of advanced analytics and automation.
Gartner’s Market Guide for Retail Assortment Management Applications: Short Life Cycle Products and Market Guide for Retail Assortment Management Applications: Long Life Cycle Products tackle these topics.
Solvoyo has been recognized as Representative Vendor in both of these reports.
The Market Guide for Retail Assortment Management Applications: Long Life Cycle Products report provides, retail assortment management applications are foundational for modernizing category management of long life cycle products as part of a digital business transformation strategy. CIOs can use this research to identify technology trends and vendors that can propel the transformation.
What’s outlined here in our blog post is the Solvoyo Vision that has evolved through years of experience gained within the cloud-based Retail Planning and Analytics platform development. We provide solutions for the retail sector bringing this vision into reality and would be happy to help you with your problems.
Gartner “Market Guide for Retail Assortment Management Applications: Long Life Cycle Products,” Robert Hetu, 7 May 2020
Gartner “Market Guide for Retail Assortment Management Applications: Short Life Cycle Products,” Robert Hetu, 20 April 2020
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