Customer-Centric Merchandising

Merchandising strategy has always been a key element in both a retailer’s self-definition and the perception that customers have of it. Literally, nothing could be more basic to a retailer’s identity than its choices about the products it stocks and how those products are presented to the public.

Today’s retailers face a number of challenges, both in executing their merchandise strategies efficiently and in using their merchandising efforts to achieve a competitive advantage. The three main challenge areas are:
  • Siloed Data and Disparate Systems: So many business processes and IT systems are involved in today’s merchandising functions that many retailers find it difficult coordinating them all. Merchandising tasks are spread across areas that include marketing, advertising, planning, inventory management, purchasing and replenishment. Most retailers have a mix of both legacy and newer IT systems that have difficulty “talking” to one another, much less sharing crucial data and integrating the multiple workflows and business processes that are involved in carrying out a sophisticated merchandising strategy.
  • Cross-Channel Complications: Many of the complexities involved in today’s merchandising efforts involve the fact that retailers are operating in multiple channels, with both similarities and differences in merchandising strategies for each channel. For example, retailers may want to offer some products exclusively in stores (or exclusively online), but they still need to fulfill delivery of those products in the way that the shopper wants. And as shoppers increasingly seek the same “endless aisle” offerings available through an e-commerce channel in the physical store, retailers need to manage inventory and fulfillment in ways that meet those needs without raising their costs so high that profit margins are destroyed.
  • Injecting Customer-Centricity into Product-Centric Processes: Almost by definition, merchandising is about products, and for many retailers it’s a big part of their traditionally product-centric approach to business. However, power has shifted from retailers to consumers, who have many more choices and much more information at their fingertips than ever before. Retailers need to marry the product-centricity of merchandising with customer-centricity, feeding their merchandising processes with shopper insight analyses so that they can provide the products customers want, offered in the ways they want to shop for them, at prices they will be willing to pay.

In addition, retailers are recognizing that shoppers differ, sometimes significantly, from region to region and even from store to store, so many are creating more localized product assortments as a means of recapturing customer loyalty. All these moves toward customer-centricity require not just higher levels of coordination but, for many retail organizations, dramatic cultural change.

Many retailers are seeking integrated or end-to-end solutions that allow them to use advanced planning to modernize their merchandising strategy and execution. Such systems can help retailers harmonize key functions related to merchandising, including:
 Merchandise planning
  • Store planning
  • Store clustering
  • Assortment planning
  • Space planning
  • Allocation/replenishment
This month’s Vendor Landscape focuses on merchandising solutions. RIS lists some of the major merchandising vendors and highlights some recent retailer deployments.

Optimizing Assortments
The country’s second-largest wine and spirits distributor, RNDC, selected the Aldata Cosmic Assortment Optimization solution to help retailers enhance their category management efforts, optimize assortment and space management and identify sales opportunities. In the food area, Sprouts Farmers Market, a natural foods retailer, uses Aldata Apollo to create planograms and collaborate with its suppliers on store merchandising efforts. And Acosta Sales & Marketing, a leading sales and marketing agency, is using Aldata Apollo as an integral part of its merchandising and planning service.

Added Functionality
Recent developments for the Argility Merchandising solution include additional and more flexible promotions. New functionalities include online back-office and bank reconciliation.


Solution for Luxury Retailer

Yurman Design, representing the David Yurman brand of jewelry, timepieces and accessories, will use solutions from Arigo, with implementation scheduled for completion before the end of the year. Arigo has also introduced its Arigo Desktop and Arigo Mobile Desktop, Enterprise Collaboration, and plans to introduce its Business Intelligence Suite for private label and associated global trade management in Q4 of this year.

Seeking Shopper Insights
Target selected DemandTec for Collaborative Shopper Insights in June 2010, following DemandTec’s May introduction of its Shopper Insights solution. In addition, Wendy’s International announced in July that it is subscribing to DemandTec Software Services.

SaaS Model Speeds Implementations
After making its head office and store-level POS solution available on a Software-as-a-Service platform named Retail-1 SaaS in January 2010, Gemmar Systems International (GSI) converted the 120-store Running Room Canada and Running Room USA chains to its new SaaS platform within 90 days. Within the same time frame, Stuart Weitzman opened its first stores in Canada using Retail-1 Merchant and Retail-1 Store (POS) on the Retail-1 SaaS platform. In addition, Mud Bay, Seattle’s highly rated premium pet food retailer, chose GSI for a systems replacement project, with the selection driven by customer service and the scalability of Retail-1, along with assistance from GSI’s new sales and marketing alliance partner J.D. Associates. Mud Bay’s strategic plan calls for aggressive growth over a five-year period, with a five-fold increase from its 17 stores operating today.

Matching Merchandise to Store Profiles
Simply Fashion, a 300-store women’s apparel chain, used Epicor Retail Planning, which combines Merchandise Planning and Assortment Planning, to determine and manage merchandise according to different store profiles, and to create assortment plans in synch with store subclass numbers, monitoring performance and reporting at the subclass level. The solution also provided Simply Fashion with visual assortment planning tools, linked to financials, to compare products, colors and styles. Improved efficiency and profitability helped the retailer meet its annual 10% growth target.

Incorporating Promotion Management
Revionics has released Comprehensive Promotion Management, a solution that includes promotional planning, promotion optimization and modeling, and integrated reporting and analytics. Recent go-lives for this vendor include Marsh Supermarkets, Save-A-Lot (Supervalu), H.Y. Louis, Longo’s Supermarkets, Family Dollar and Vallarta Supermarkets.

Localized Assortments of Sizes
Charming Shoppes, parent company of plus-size women’s retailers Lane Bryant, Fashion Bug and Catherines, is enhancing their ability to help customers find clothes that fit through its use of SAS Size Profiling, creating store-level assortments that include size profiling. In addition, The Wet Seal is using SAS Size Profiling to create more accurate store-level size profiles, in a move that the retailer expects will minimize markdowns and lost sales while boosting margins.

Packaging Merchandise Planning Tools
Torex Merchandise Planning offers three separate modules, each of which has a specific group of functions and can be deployed in four to five months. The smaller size of each implementation means retailers can expand their merchandising functions without committing the same level of resources of larger deployments. The three packs are: In-season Weekly Stock, Sales & Intake (WSSI) Re-forecasting; Pre-season planning & clustering; and Assortment planning. 
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