Localization, assortment rationalization, inventory optimization have been common words in the retail buying process for the last several years… and they are not going away any time soon. While the changes to consumer behavior specifically increased value seekers and massive growth in multi-channel shoppers, these initiatives are even more important. Expect to see the number of retailers incorporating these initiatives to be even more widespread in 2021 going forward.
For brands, this can seem like a black box of decision-making. Retailers going through these organizational or strategic changes can seem less transparent as partners than before these initiatives. Communication starts to get more formal, meeting structures are changed, and expectations are immediately different and can seem vague. However, from being behind the scenes with retailers going through these changes, this is not typically the intent. So, let me show you the man behind the curtain and share a recent case study and learnings from a project I completed this year with a top pubilicly-traded retailer.
Case Study: Supporting assortment planning transformation
The retail buying process must evolve.
In the past, the buyer or merchant was solely responsible for selecting assortment, connecting with suppliers, determining the shelf layout, as well as conducting all research and analysis … in addition to running the day-to-day business. As you can imagine, this limits the amount of data that can be utilized, slows down the process, and can result in homogenized assortment across the diverse store base.
The solution? Change the process. This retailer must revamp their line review process to reduce speed to market and increase localized assortments. To do this the right way, the organizational structure was evaluated. This resulted in creating an assortment planning function, among other changes. With this addition, a deeper level of data can be processed to identify patterns of consumer demand at a store level, as well as uncover inventory opportunities.
The retailer needed help to move faster.
As you can appreciate, changes involving structure, process and data at a large retail organization can be slow to implement and even slower to see results. To speed this along, Callahan was hired to lead the training and implementation of their new line review process because of our ability to transform data into measurable actions, as well as my years of retail experience building strategy and developing teams of buyers and planners. My job was to onboard the new associates, teach them the new line review process and coach them through data analysis, hypothesis creation and recommendation development.
Uncovering consumer demand patterns at a store level that translate into sales growth strategies requires a lot of data from various sources. Deciphering that much data is challenging, but even more challenging when the function and the associates are brand new to the organization. I measured progress through self-assessments to ensure effectiveness. Based on the training assessment, over 70% of associates were confident and could lead others through this data digestion after only 8 weeks — up from about 20% in the pre-training survey. The focus on localization and productive analysis was effective and all business improvement targets were exceeded after only reviewing a fraction of the businesses.
The planners were learning and running the new process at the same time. My coaching included real-time weekly guidance as the planners partnered with merchants, cross-functional teams, and prepared for supplier meetings. This allowed me to pressure test the process and identify potential opportunities for improvement.
4 takeaways for all brands
Tip 1: Expectations are now different. Retailers going through localization, assortment rationalization, and inventory opptimization are committed to getting the product right for their customers, infusing more data into their decision-making, and working with the right suppliers to accomplish these objectives quickly. This is universally true, but what is also universally true is these strategic changes will have an impact on how brands work with their buyer partners. From this point forward, do not fall back on what has always worked.
Tip 2: Expect that it will be harder to get placement on shelf… especially in all doors. More and more multi-channel, large box retailers are becoming increasingly critical of in-store assortment and inventory investments. Be prepared for the assortment rationalization and localization discussion. Come ready with recommendations on how your retail partner can maximize opportunities at shelf and offer the right selection locally.
Tip 3: Expect more competition from private labels and other brands. Buyers will be evaluating brand relevance and supplier options to get the branded vs. private label mix right for consumers. Plus, remember that assortment rationalization will reduce assortment overlaps, which could mean fewer brands on shelf. Be prepared with a plan to drive your brand’s demand on shelf and data to support why your brand is valuable to consumers.
Tip 4: Your buyer expects more data. For most brands, what was considered insightful data before, will likely not be rich enough now. Your buyer now has access to more insights internally, so level up your data game. Buyers will be expecting consumer and market insights, and assortment recommendations that are data-informed. Learn more about the four forms of insights buyers are looking for.
Retail evolution will never be complete… and that’s why we love it. Retailers will continue to innovate and evolve their processes, pushing to offer the best customer experience to grab the most market share. However, the one thing that isn’t changing in retailer evolution, is the demand for more data. As we watch the evolutions to come, they will be data influenced. So, assess your strengths and evaluate your data availability to ensure that you are prepared and can remain a strategic partner and an active participant in the changes to come.
Is your brand ready? Is your organization set up to meet the new challenges? Let’s connect.
Before joining Callahan to lead retail strategy, Kristin was senior director of merchandising at PetSmart and director of planning and distribution at PayLess ShoeSource. Her previous experience informs her broad range of retail expertise: buying, financial planning, in-store customer experience, pricing, inventory management, shelf allocation, space optimization and more. Kristin now helps brands with retail strategy creation, assortment building, merchandising, pricing and promotions across brick and mortar and e-commerce channels.