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BEYOND OMNI CHANNEL
10 MERCHANDISING HACKSTO FUTURE-PROOF
YOUR RETAIL BUSINESS
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Introduction: Shifting Sands
It’s undeniable: The new retail reality is no longer about juggling channels. There’s not just the question of online vs. in-store. The new age consumer expects captivating experiences from retailers.
Captivating experiences can mean seamless checkouts from mobile, following a trial and pickup from the nearest store. It may mean engaging content that compels the shopper to shop from their Instagram account. It may also mean consistently competitive prices, transparent price-match on e-commerce websites, traceable supply chains, same-day deliveries, or intuitive shopping recommendations. Magnetic merchandising across all channels – in-store, e-commerce and social – can act as a strategic asset that differentiates the good retailers from the great ones and helps attract today’s discerning consumers. The new age of retail calls for the new age merchandisers: those who approach retail like artists to shape new retail frontiers and wield data like scientists to make retail breakthroughs.
This e-book expands on ten tips in key areas of merchandising- Assortment, Price, Inventory & Presence- for impressive merchandising to break through the noise and clutter and come out with retail practices that will outlast the shifting sands plaguing the industry right now.
The Right Mix:One of the most important roles of merchandising is to offer
products that consumers truly want. To provide the right assortment at the right time, merchandisers can make smarter assortment
planning decisions by using data for customer-centric decisions on which products to offer for sale based on the market. You can save time and effort by optimizing your assortment planning process to
achieve your traffic, volume and revenue goals.
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1. Strive for ‘On Time’, not ‘The Best’.
Here’s where you throw away all you know about the product-centric retail ideals of the 20th century. Assortment planning excellence means remaining relevant and competitive by knowing exactly what types of products and styles are trending. The challenge is to have a better mix than the competition at any given time, not have the most or the best products. Use retail data analytics to plan ahead for seasonality proactively, and enhance your variety and localization to adapt to regional trends.
With retail being largely driven by uncovering customer insight, the merchandising game plan changes dramatically. Our data shows that trend-aware, not trend-forward, retailers are one step ahead of the rest. Their mindset is clear – focus on being more integrated with inventory planning and demand forecasts. For others, there is a certain risk in trying to level the playing field – the risk of downgrading both brand’s positioning and identity.
However, the risk is well worth taking as the opportunity for any trend-led retailer who enters this environment is huge. With the highly desirable real-time update in the background and careful analysis, you won’t be missing out the next wave. Retailers should be looking to fill their inventory with a carefully selected assortment that avoids items with high discounting rates and instead fill their shelves with low discounting rate and high replenishment goods. That means figuring out the right balance of trend-forward items and older classic versions that are mainstays. How they achieve that is up to them, but they need to do it fast to cover as much ground as possible before someone else claims it.
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Case in point:Assortment comparison for totes at two well-known retailers:
Topshop & J.Crew. While J.Crew’s (right) mix looks tempting to go with for summer sales, it was Topshop (left) that minted more with
the right tease of trend-forward and inter-seasonal styles.
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2. Remove The Blinders.
Know how you measure up by using competitive data to see how your company performs compared to rivals through competitive benchmarking. Use data analytics to find every single hot-selling item on your competitors’ online marketplaces. Analyze your competitors’ product catalogs to identify which products you have in common and which items are unique, so you can identify assortment gaps and decide whether to invest more in certain areas, such as private labels.
Assortment size and variety matter because when retailers expand their product assortment, they experience a 12% increase in sales for every 10% increase in unique products sold. You can spot market trends faster with competitive intelligence data on specific retailers, categories or brands for timely promotions to increase your sales.
Gap analyses offer powerful insights by showing where your assortment over-laps with your competitors and where you’re a unique seller, which can give you an edge and spot opportunities to strengthen your positioning. Identifying brand-level gaps in your catalog can help you adapt your assortment to keep up with your competition.
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Variety boosts sales:
When retailers expand their product assortment, they earn
a 12% increase in sales forevery 10% increase in unique
products sold.
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Savvy retailers vigilantly monitor rivals’ catalog movements, including which products they add or remove from their catalogs. They even receive real-time alerts as soon as their competitors run out of stock, so they can capitalize on the opportunity to boost the visibility of in-demand products and capture more sales.
3. Forecast Demand, in Real-Time.
It’s vital for buyers to accurately assess demand to forecast and buy the right amount of merchandise. Knowing all products available across all channels, including real-time inventory statuses helps merchandisers with holistic plan-ning for superior flexibility and an agile supply chain. Review your inventory analytics to ensure you have sufficient merchandise available based on your projections, include a best-case scenario for sales. Consider such factors as sell-through rates, seasonal peaks, and gross margin. Retail data analytics can help merchandising teams with inventory management to prevent shoppers from walking away empty-handed due to out-of-stocks.
The Buyer’s DilemmaOnce you know which products to offer in your catalog, your buyers need to source these items on a timely basis and at a
reasonable price. Here are merchandising considerations for them, including the data they need to make smart procurement decisions
that support operational efficiencies and sales objectives.
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4. Time your Back-in-Stock before you even go Out-of-Stock.
“Inventory management … today also means data transparency,” states Oracle. Real-time visibility into cross-channel inventory data can help you sell your products without the need to discount items due to overstocks.
Buyers should always be mindful of current inventory levels and marketing promotions across all channels, as they can cause inventory levels to fluctuate.
Collaborating with proven partners with a reputation for reliable delivery and the agility to respond to changes in consumer demand or supply chain disruptions can also ensure all channels remain well-stocked.
Preventout-of-stocks:
Using data to accurately forecast, buy and promptly replenish inventory can help
buyers maximize sell-through and improve customer
satisfaction.
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5. Remember: You’re never Out-of-Stock, You’re Selling Limited Stock.
This tip is especially important as we head into the business-critical holiday sales period when sales spike in November and December. In the event a product is out-of-stock, use omnichannel best practices to save the sale by stating availability, letting shoppers subscribe to an email or text to learn when it’s available, allowing pre-orders and providing similar products as alternatives.
The Only P That Really Matters.Delight shoppers with the products they want at prices they’ll pay.
Why is pricing so important to retail success? A U.S. study found the top factors that are very or extremely influential in determining where
consumers shop are price (87%) and discount offers (71%). Drive operational efficiency and growth with real-time price optimization.
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6. It’s 2017 & Price is a Subjective Metric.
Price optimization is a big data analytics solution that helps you determine how shoppers will respond to different product pricing levels, so you sell moreproducts by outsmarting your competition. Retailers are increasingly turning to the science of price optimization “to turn big data into actionable insights [and] … make shoppers feel their favorite brands are delivering value.” To optimize your pricing strategy, use data to measure how changes in your competitors’ prices impact your sales results.
Price optimization can help you identify products suitable for price changes to achieve your performance objectives. You can also simulate forecasting scenarios based on changes to pricing strategies or specific performance metrics. Pricing intelligence data can also help you identify the best price per SKU to maximize your revenue.
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The price is right:
Price optimization and strategic promotional
planning can help retailers convert more browsers into
buyers by consistently offering competitive pricing across all
channels.
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7. No Tricks, Just Treats.
As McKinsey & Company emphasizes, customers no longer need to rely on memory to compare prices across retailers, as price-comparison shopping engines instantly display competitors’ pricing in a single view. This means retailers must adapt to today’s price-aware shoppers. Review your retail data analytics across different channels and prices to determine whether you should pursue a single pricing strategy or vary pricing across different channels. The best answer for your company depends on whether significant differences exist among your audience for each of your channels.
If you proceed with single pricing across all channels, use marketplace insights, including competitive analytics, to know how your prices compare to your rivals’ prices. For variable pricing across channels, data can reveal how customers respond differently to different channels. It’s essential that you communicate how the different prices reflect the differences in service and customer experience per channel. Ultimately, your decision matters because shoppers have greater price transparency than ever.
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8. Discount-Proof Your Price Architecture.
Retailers must constantly keep an eye on their competitors’ pricing strategies and discount movements. That’s because millennials are vigilant, savvy shoppers who know the best prices and deals before they shop. Knowing competitors’ price movements in real-time can help you mark down prices and beat your rivals’ best deals – or even mark up prices to capitalize when a competitor’s product is out of stock to maximize your margins. Discover the impact of seasonal and promotional discounts to ensure your products are always competitively priced .
Analytics can also help you optimize your promotional prices according to your goals, such as unit, revenue or margin targets.
Look Good Across All ChannelsSince shoppers now expect seamless shopping options across all
channels, let’s look at how omnichannel merchandising best practices help retailers delight consumers and keep them coming back.
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9. Story Tellers Make the Best Retailers.
It’s a hyper-visual world we live in. As e-commerce growth continues, retailers must use online merchandising best practices to convert shoppers from casual browsers to committed buyers. Make your e-commerce website homepage inviting to potential customers by greeting them with a captivating story that makes shoppers excited to explore your brand and products.
To engage online shoppers on a desktop, tell a story about who you are, what you sell and the purpose that drives your brand. For immediate impact, make your story as visual as possible. Use such visual merchandising elements as large images and clear copy. Beyond the homepage, on product-specific web pages, use the inverted pyramid method, which places the most important
Stand out with stories: Cosmetics retailer Memebox’s e-commerce homepage combines
a playful theme and bright colors to tell a story of fun, youthful joy.
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To make a big impact on a small screen, retailers need to apply mobile-specific online merchandising tips. Consumers are shopping far more frequently on mobile devices, including smartphones and tablets, and m-commerce is poised for massive growth in the medium term, as the following chart shows.
Grab mobile shoppers’ attention with elegant, high-resolution product images on your e-commerce & mobile site. Strive for clear, uncluttered and unique images that show the visual appeal of a product and evoke positive emotions.
Earn consumer confidence by taking photos from multiple perspectives, to give shoppers rich visual information about an item, as 66% of buyers appreciate alternate product views and 61% of buyers like to zoom-in for a closer look.
M-commerce boom: Business Insider predicts mobile commerce will reach
$284 billion, or 45% of the total U.S. e-commerce market, by 2020.
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10. Share Social Proof.
This is consumer-driven industry, after all. Make sure your customers are constantly seen and heard by the world, not just you. One of the most credible merchandising tactics is to show evidence of happy, loyal customers. To build brand excitement and trust, encourage actual consumers to create and post user-generated content, including images of your products and stores. User-generated content is a powerful way to infer that your products are relevant because consumers like, buy and use them. This content can also make consumers feel special and valued if you promote their photos and selfies on Facebook or Instagram. Further fuel social media excitement by rewarding these consumers with digital coupons to reinforce positive word of mouth and social sharing.
Merchandisers Are The New Data ScientistsThese retail expectations are intimidating, if not unachievable. With the right resources, they remain within your control. Offer a unique, engaging and smooth experience to guide shoppers through a store or website with ease and speed to maximize sales across all channels. To know which merchandising elements to prioritize for your brick and mortar and online shops, use data to make decisions with greater speed and confidence.
Maximize your profitability, and optimize your pricing and assortment decisions with data-driven insights for merchandise consumers really want.
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The Inside Man for Retail Intelligence
Sources
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• Boosts Customer Satisfaction and Sales. Oracle. 2014.
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Big Commerce. 2017.
• Geva, Shai. How Retailers Are Making Profitable Pricing Decisions Using Price Optimization Software.
Upstream Commerce. September 21, 2017.
• Kilroy, Thomas, Ian MacKenzie and Audrey Manacek. Pricing in retail: Setting strategy.
McKinsey & Company. April 2015.
• Wallace, Tracey. How 12 Wildly Successful Online Stores Use Visual Merchandising to Drive Sales (and How
You Can, Too). Big Commerce.
• Meola, Andrew. The Rise of M-Commerce: Mobile Shopping Stats & Trends. Business Insider.
December 21, 2016.
• Abbasi, Shahid. Tips for effective Visual Merchandising in mobile app. Designrfix. December 22, 2016.
• 5 tips to improve your online visual merchandising. Poq commerce. 2017.
