Tech Guest Viewpoint - Social Media Use Grows for Merchandise Planning
By Ken Morris, Boston Retail Partners
What a difference a year makes! We have seen a dramatic increase in the use of social media by merchandisers over the past year, as retailers look for innovative ways to enhance their merchandising decisions to deliver the products consumers want across a seamless shopping experience.
According to Boston Retail Partners’ 2014 Merchandise Planning and Allocation Benchmark Survey, the use of social media by merchandisers has increased 550% from the past year. While this increase is impressive, the current use of social media data is still limited, with only 39% using it for product development and 35% using it for promotional planning.
As the survey results indicate, retailers are just scratching the surface when it comes to leveraging social media content for merchandising decisions. However, this creates a competitive advantage to retailers that seize the social media opportunity for merchandise planning.
Beyond the obvious reason to increase brand awareness and loyalty, social media is becoming an imperative marketing and merchandising tool for retailers. Social media has created an avenue where retailers can actively engage their customers and “listen in” on their social dialogue. In addition to facilitating open communication with consumers, it allows retailers to glean valuable insight into the preferences of their target market. This real-time insight to customer preferences enhances retailers’ merchandising decisions to offer the right products, at the right place and at the right time.
Though motives behind the decision to utilize social media data vary by retailer, it is important to note the growing availability of tools to facilitate data mining of social media in the retail marketplace.
With the integration of social log-in and e-commerce sites, retailers have been granted access to large quantities of customer information. For instance, upon logging on to a Website using social media credentials, customers consent to instantly provide retailers with demographics, preferences, product/brand likes and many other details about themselves. This customer insight results in large quantities of relevant data ripe for retailer reference. This data can help align demand, sell-through merchandise, localize assortments, and establish pricing and promotions.
Social media enhancing merchandising decisions
Leveraging a strong social media campaign, retailers can influence the trends and key items for the season. Retailers can incorporate social media feedback on trends when planning their future lines to help drive merchandising decisions that reap substantial financial benefits such as a reduction in markdowns, higher gross margins and increased sales.
Traditionally, assortment decisions were made in a meeting with a handful of people. With social media platforms, retailers can now enhance assortment decisions based on consumer opinions. For instance, retailers can test different styles/assortments and receive a quick response to help segment ‘likes’ based on products, demographics and psychographic attributes to augment other data in merchandise planning decisions.
Beyond planning, social media insights can play a roll in managing order levels and replenishment. Based on real-time social media responses and feedback on new merchandise, retailers can adjust order levels, allocation and replenishment to maximize margins.
Social media – beyond merchandising
We foresee social media becoming more fully integrated into retailers’ e-commerce sites. Retailers are already making it easy for customers to post recent purchases and discuss products on social media sites like Facebook.
The next step is to enable consumers to buy directly from the social media sites without having to navigate pages in the e-commerce solution. This technology is currently available and provides a prime opportunity for retailers to make it easier for the consumer to get what they want, wherever they want it and in real-time.
Ken Morris is principal at Boston Retail Partners