One of the jobs I had early in my career was as a planner. If you have ever had a job as a planner or built any sort of sales, inventory, or financial plan, you were likely trained, liked I was, to start your plan by copying last year’s profile to start. Next, you adjust the profile for any shifts like Easter, large weather anomalies, or unprecedented clearance inventory– you get the picture. And, depending on the year, you might even get to plan a 53rd week shift. Ok, got it? Now plan 2021. And go.
All jokes aside, preparing and planning for 2021 will be a challenge, and navigating this successfully will require brands and retailers to work closely together. Planning conversations are sure to be unique this year, but there are four topics that buyers undoubtably will want brands to address. As a former buyer, I have some advice for brands on how to prepare for these topics.
Topic #1: Inventory management
Generally speaking, there was not a product category that performed on 2020 plan requiring inventory adjustments to be made in every category, for every retailer. These feast or famine demand changes happened at unprecedented extremes, pressure testing both retailers’ and brands’ supply chains. This has motivated retailers to acknowledge capability gaps, areas where they are over leveraged, and encouraged them to think about diversification.
What buyers want to hear: You (brand, supplier) have decreased your reaction time to inventory need fluctuations and increased flexibility.
What that actually means for brands: Buyers are looking for brands that have learned from supply chain pressure testing and have reacted. At face value, this request could be interpreted as a request for shortened lead time or increased domestic safety stock. However, there is only so much lead time that can be taken out and more safety stock has significant risks as well.
My advice: Increase your internal demand planning capabilities and share your approach to forecasting and inventory prioritization with your partners. Also, ask your retail partners for greater connectivity between your organizations with the goal of improving and aligning inventory forecasts. Showcasing a renewed focus on inventory management, investments in demand planning capabilities, and increased forecasting alignment will address your buyers’ concerns, as well as demonstrate a proactive approach to inventory management.
Topic #2: Retailer Initiatives
Covid’s impact on retail has been an acceleration of trends that were already emerging across the market. As a result, retailers are rapidly escalating their efforts on initiatives like omni channel, sku rationalization, inventory optimization, private brands, etc. At face value, these initiatives might not equate to growth for brands.
What buyers want to hear: You (brand, supplier) are on board and excited to support, and your 2021 plan aligns with their initiatives.
What that actually means for brands: Buyers are looking for brands that can help drive their initiatives, not brands that are just along for the ride. At face value, initiatives including words like “rationalization” and “optimization” could have significant negative impacts on a brand’s shelf space, and omni channel initiatives can create cannibalization for a brand across retailers, leading to unpredictable demand patterns.
My advice: Resist the urge to defend your shelf space and don’t ignore your potential impact of the retailer’s omni channel strategies. Be prepared to discuss these initiatives, and bring market data, consumer insights and recommendations for your retail partners. A proactive approach with mutually beneficial recommendations that think category over brand, will always resonate well with buyers.
Topic #3: Drive Demand
Spring 2020 chaos triggered a lot of consumers to try new brands they might never have tried. Inventory shortages, store closures, and increased online shopping caused more brand switching; which in turn, decreased brand loyalty. Additionally, this environment created more value-seeking shoppers. Both of these outcomes opened the door even further for retailers to propel private brand strategies, making it more challenging for brands to maintain shelf space.
What buyers want to hear: You (brand, supplier) have a solid plan in place to generate demand, earn your shelf space, and grow the category.
What that actually means for brands: Buyers are looking for brands that are actively driving sales for their product. At the same time, buyers are evaluating brands that are NOT generating their own demand and evaluating whether the brand is incremental to the assortment or could be replaced. At face value, this request could look like a directive to go spend millions of dollars on marketing.
My advice: While millions of dollars could be the right budget for your brand, I would recommend you approach the conversation differently. Instead of starting off with the size of your budget, share with your buyer how you plan to connect with your consumer. What do you know about your consumer, what influences them, how do they shop, and where are they looking for information about your brand? While buyers like to hear there is a sizable budget, it is rare that a brand can communicate “why” and “what’s it worth.” At the end of the day, your buyer wants to feel confident that the brands on their shelves are engaging with consumers independent of the retailer’s marketing efforts.
Topic #4: Better Data
The vast majority of planning sessions, product pitches, line reviews, brand evaluation conversations, etc., all start in the same way. They all kick off with some sort of data or information sharing. It is not a differentiator for a brand to start the conversation this way, however, the quality and relevance of the data is where the pitches vary dramatically. Buyers get a lot of information shared with them from current partners, prospective partners, and internal sources.
What buyers want to hear: You (brand, supplier) have an informed opinion of the category, have access to insights that are valuable, and are using more data.
What that actually means for brands: Buyers are looking for brands that understand the category, the market, and the consumer. Buyers are also looking for brands to share information that is incremental or supplemental to the information they are getting from their internal teams.
My advice: For this topic, what a buyer wants to hear is actually what they mean. Bring relevant information to start the conversation. This is the time to start assessing whether you have access to the right data or if you need to focus on data acquisition. It’s also the time to assess whether you have the right analytics capabilities. Then, get honest based on these assessments. Do you really know the category, the customer, and the market or do you need to dig deeper? I said earlier that sharing information is not a differentiator, but sharing best-in-class insights and recommendation based on data will for sure put your brand in the best possible position with buyers.
2021 will definitely be an interesting year for all retailers, brands, and consumers. I had a boss tell me one time that the moment you build a plan, it’s wrong and that’s why we have a forecast to measure the degree to which it’s wrong. So, the one thing that is for certain, is that 2021 will not perform exactly to plan, and we will all be wrong. However, with all the uncertainty and change, this is the perfect environment to build strong, strategic relationships with your retailers. Keep that goal as your focus as you prepare for your line reviews, and take this chance to make it impossible for your buyer to run their business without you.
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.