The New Skill Set of Today’s Chief Merchandising Officer

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The New Skill Set of Today’s Chief Merchandising Officer

11/08/2016

When retail consisted mainly of brick and mortar stores, the role of the chief merchandising officer (CMO) focused almost exclusively on selecting merchandise, designing display strategies and planograms and driving category performance. This role was typically held by people who rose into the role as buyers. That’s because buyers first and foremost excel at spotting the next hottest trend while also having a keen eye on the dollars and cents side of the business.



CMOs traditionally also oversee the process of seasonal merchandise planning and product introductions. If their timing is off, the retailer ends up with markdowns, which impacts margins and profits.



While all these qualities are still expected of today’s CMOs, the digital retail landscape has presented new challenges to making sure retailers are delighting customers at every turn. To keep pace with the demands of digital retail, CMOs must now master the supply chain and operate across the omnichannel platforms of today.



Rather than the trend spotters of the past, today’s CMOs are far more likely to also be number crunchers who understand algorithms, are adept at analyzing data, and know when and where to stock merchandise in order to maximize sales and minimize markdowns.



Take Michelle Gass, Kohl’s new data-savvy CMO. She was previously the company’s head of marketing, where she took a keen interest in using data to drive the company toward more emotional messaging. And Target’s new CMO, Mark Tritton, hired earlier this year from Nordstrom, credits both logic and intuition with his ability to generate results, including reduced lead time, increased sales and better profit margins.



New CMO Skillset

Responding to the demands of the digital retail revolution requires a significant shift in the skill set of today’s CMO — a shift that departs from focusing on in-store merchandising and instead on orchestrating digital engagement with in-store value.



Here are three critical ways the CMO mindset is shifting to keep pace with the today’s consumer-driven, digital world:



1. From product insights to consumer insights

While retailers have always relied on analytics, the focus of the data in today’s digital retail world has shifted from “product-in-the-store” to “consumer-in-the-world.” Now, rather just gathering, analyzing and strategizing to determine what to buy and where to put it, today’s CMOs are more focused on consumers and their wants, needs and tastes. Add to that their browsing patterns, purchase and return histories, demographics and social media use.



And with Forrester Research reporting that 80% of shoppers begin their shopping online (even if they end up making their purchases in stores), it’s no surprise that consumer analytics are driving so many of the decisions today’s CMOs are ultimately responsible for.



2. From narrow channel to expansive platform

Burberry, the venerable British fashion brand, currently reports that approximately 70% of its business is retail and 30% is manufacturing. Five years ago, those numbers were reversed. What changed? Burberry used analytics to build a profile of the quintessential millennial shopper and became laser focused on serving that shopper with what it called its shoppers’ “platform.”



Burberry began with its website, offering up the products it believed — and data showed—millennials would buy. Then, based on online sales, they launched a major reimagining of its retail stores. This new model — shifting from narrow channel to expansive platform —takes into account the shopper’s entire universe, which has grown exponentially in recent years.



That’s one reason why it’s so important for CMOs today to know both merchandising and technology. It’s the best way to give consumers choice, not only in where and when they shop, but also in how fast their purchases are delivered. That means shifting from advanced planning to real-time action based on real-time data. It also means using online sales to inform store offerings, not the other way around.



3. From driving business to delivering real-time results

CMOs have always been tasked with driving business, but traditionally that responsibility was met solely through merchandising. In today’s digital retail world, it is now met through a combination of merchandising, digital engagement and ecommerce. With this comes increased pressure to respond in real-time, transforming CMOs from thoughtful planners to on-the-spot decision-makers.



For an example of just how many quick business decisions and priorities are determined by CMOs, you need look no further than “fast fashion.” At Spanish retailer Zara, fast fashion dramatically shortens how quickly new styles go from fashion runway to Main Street. It also causes new styles and trends to become obsolete in a matter of weeks, leaving a retailer scrambling to keep up.



Unlike many apparel retailers, Zara controls nearly all the steps in its supply chain, which is why the company can outfit its stores with new clothing and accessories in just a week or two while it takes the rest of the industry about six months.



Zara does this by putting its new offerings online and using real-time data sales data. When a design doesn’t sell, it’s dropped. When it does sell, Zara designers immediately extend the line and Zara manufacturers immediately produce and ship it to stores.



Success in the chief merchandising role today requires evolving from a product-first to consumer-first mentality and constant consideration of the various shopping platforms consumers have to choose from.



CMOs who succeed in making these shifts will adapt and compete in digital retailing and deliver the bottom-line results their C-suite peers expect.






Peter Zaballos is senior VP and chief marketing officer at SPS Commerce, which perfects the power of trading partner relationships with a retail cloud services platform. Follow Peter on Twitter at @peterzaballos.


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