High-definition merchandising: Sharper focus, clearer decisions
While technology and innovation flourish on the consumer side of fashion, inside retail headquarters, merchants and planners still rely on reports and tools that have barely evolved from the three-ring binders and green screens of the 1970s. Merchants and planners, many of whom grew up as digital natives, navigate an awkward time warp: They commute from the consumer world to offices that stifle their skills in interpreting and acting on visual, interactive data and tools.
That’s all changing—radically. New technologies are transforming how merchants work, and how fast, by bringing more clarity than ever before possible to key merchandising and planning decisions. And the opportunity is significant.
Pioneering retailers are bringing growth and profitability opportunities into focus by adapting the visual, machine-assisted discovery and decision-making technologies that exist in the consumer space to retail management. As they do, they are upgrading to high-definition (HD) tools with the functionality and intuitive experience employees have come to expect from technology they use in their daily lives. These HD merchandising tools do the following:
Help employees visualize product and attribute trends.
Guide employees to new discoveries and previously hidden relationships.
Give employees the power to interact and collaborate the way they do in social and consumer spheres.
Connect employees and business partners around the globe in real time to make better, faster decisions together.
VISUALIZE
Consumers buy based on what they see. But in deciding what to offer them, merchants and planners have been stuck in a process that disassociates product appearance from performance. It’s not possible for merchants and planners to fully integrate their respective visual and analytical skills when hot-selling metallic ankle boots are reduced to a spreadsheet cell labeled Style 7035276.
Innovative retailers are merging financial science and visual art by incorporating interactive, product images into planning software and decision processes, rather than wading through SKUs and spreadsheets and then transitioning to product sample rooms.
Tying interactive product imagery to financial performance metrics is enabling merchants and planners to glean deeper insights quicker by illuminating trends that can drive more compelling assortments and simultaneously forecast profitability. These shifts are resulting in measurable performance improvements, including 10% to 20% increases in inventory productivity and up to 15% fewer hard markdowns, through decision-making processes that are 30% to 40% faster.
GUIDE
Merchants and planners used to base decisions on limited information that was often a year old. They now face the opposite problem—relentless streams of desultory data.
Behind-the-scenes data mining now provides recommendations to guide merchants’ and planners’ focus to key areas for evaluation, using statistics to correlate product, location and customer attributes with performance and financial metrics. Merchants and planners can evaluate and draw upon these mathematically intelligent suggestions during the decision-making process, resulting in increased efficiency and more time to focus on strategy and successful execution.
The shared language of digital product images creates a shared understanding between functional areas and business partners. For example, merchants are further able to understand and apply planners’ recommendations on SKU breadth, assortment mix and segmentation. Wholesalers can make more informed and easily understood recommendations to retailers regarding pre-season product selection, quantities and allocations and in-season re-orders, resulting in faster order decisions and fewer missed opportunities. This shared language also facilitates coordination with marketing by easily sharing images of top sellers that are available in inventory so the products that anchor the retailer’s home page or catalog cover can be the ones with the most financial potential right now.
INTERACT
The dynamic screen interactions that consumers have been conditioned to expect are now starting to be leveraged by planners, allowing access to point-of-sale data that updates, reorganizes and filters images—not codes—on interactive reports. Images that can be dragged and dropped let merchants digitally manipulate assortment plans until an optimal visual and financial mix is achieved.
Decision-based analytics, guided recommendations and the more intuitive, shared language of dynamic photos lend themselves to mobile communication in ways spreadsheets and physical samples never could. Mobile technology unchains merchants from their desks, allowing them to spend more time visiting stores, competitive shopping, networking with vendors and observing consumers while simultaneously working directly with one another to make critical business decisions.
CONNECT
Merchants and planners are also incorporating social media insights into their processes. They are crowdsourcing product feedback and using tools to crawl blogs and product reviews for real-time insights to inform product sorting and segmenting—allowing consumers to drive how products are reviewed by merchants and helping retailers talk to consumers in their language.
Diane Ellis, CEO of The Limited, said in a 2015 NRF Big Show omnichannel panel, “Many times, we tried to come up with great descriptors for a product—why the fit is great or why a particular style—and it didn’t necessarily resonate with the client. But being able to leverage her testimonials—use the actual customer language about the fit, style, fashion—really was important to her. We can then bring that into our language.”
BENEFITS AND GETTING STARTED
While only a handful of companies have started the switch to high-definition merchandising, it will soon become the standard. The most public example to date, though it touches on only a subset of HD merchandising’s capabilities, has been Tommy Hilfiger’s announcement of a digital showroom that reduces dependency on physical samples.
Other retailers and brands are achieving sales increases up to 5% and turns improvements up to 20%, while creating a work environment suited to today’s merchants and planners. Yet this is only the start of a journey that the industry will take time to fully adjust to and embrace.
The roadmap to execute this move to high definition varies depending on each organization’s starting point and priorities. Each of the visual, guided, interactive and connected advancements yields incremental business improvements that, when woven together, create a truly revolutionary model fit for today’s digital world.