Retail strategy Q&A: Assortment planning–Impact on brands

In part one of our retail strategy Q&A series, Kristin Demel, retail strategy director at Callahan, explained assortment planning basics. In this second Q&A of a series, Kristin will discuss:

  • how assortment planning impacts brands
  • how sharing data builds relationships with retailers
  • pointers for brands

Kristin will answer more questions related to RETAIL STRATEGY and planning in next week’s retail strategy Q&A discussion.

How does this impact brands?

I think it’s going to impact them a couple of ways. As a brand, hearing the words assortment planning, SKU rationalization, or assortment optimization, would instantly trigger concerns around receipt reduction or getting cut from the assortment all together. Unfortunately, that is a real risk. There is a potential impact to the size of a brand’s business with the retailer. This also can impact your new products. Innovation and newness will likely be evaluated for incrementality differently, as well as being evaluated for the right number of stores.

Second, there is a potential impact to a brand’s relationship with a retailer. This level of analysis on the retailer side creates an opportunity. From a retailer’s perspective, there’s a lot of change happening. The buyers might be working with new team members, or existing team members have new responsibilities, but regardless, everyone on the retail side is learning a new process and a new way to make decisions.

All of it involves using more data. Assortment planning is not going to be successful without the right level of data including market data, competitive data, emerging brand information, and trend insights in addition to sales data. Typically, the retailer is going to have a really great grasp on learnings derived from their internal sales data. However, the observations that come from data outside the retailer’s store can be more challenging for the retailer to collect and analyze.  This is the opportunity. Come to the table as a partner to your retailer by providing, sharing and having open conversations about market share, consumer behavior, and competition. All of that becomes super valuable to your retail partner.

Sounds like sharing data helps build relationships with retailers. Is it truly about just giving them access to more information?

Yes, sharing the information with your retail partners meets their immediate needs, but it’s more than that. If you think about the pressure that the retailer is going to be under, it’s collecting all the data to make the right decisions, but also putting together all the pieces, finding the patterns and interpreting the data. All of which becomes a place to help retail partners. It’s not just handing over the data but helping to interpret, build strategy, and provide recommendations on how to action the insights.

Sharing data and insights establishes your credibility in the category. Both can put your brand in a position to be a thought leader and resource. This ultimately positions the brand as a strategic partner building trust that the brand’s recommendation to the retailer will grow the mutual businesses.

Do you have any pointers for brands?

I want to make sure that brands are thinking about using the data not only to influence retailer decisions, but make sure their recommendations to their retail partner aligns with the data. I’ve seen brands do this well and not well.

I’ve had brands bring me tons of data at the start of their pitch. There would be all this momentum in the conversation, then they would get into the recommendations and there would be literally no tie to anything that we just talked about from the data. Nothing sucks the air out of a pitch faster. It quickly turns into a catalogue review vs. a business discussion. If you have data and insights to share, use them, but make sure that your conversation is cohesive.

Check back for more FAQs on retail planning. If there are any specific questions you have, contact Kristin.

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