During a Super-Session at JDA’s FOCUS 2014 in Las Vegas, five leading retail executives discussed how assortment planning is critical to addressing the challenges posed by today’s empowered consumers. This panel, which I was privileged to moderate, included:
- Linda Canada, SVP of merchandise planning, allocation & operations, DSW
- Michael McAbee, strategy officer and VP of merchandise planning, Hibbett Sports
- Tony Atenasio, director of business process, PVH Corp.
- Andy Harwood, director of product systems, American Eagle Outfitter
- Jon Beck, CEO, Columbus Consulting
The following is an excerpt from those panel discussions.
Welty: One thing I think we all agree on is that the pace of change in retail is accelerating. Many people believe that there will be more change in the next five years than occurred over the past 50 years. And the nature of change is changing as well. The major causes of change in retail in the U.S. over the past 150 years can all be attributed to the migration of humans—the migration to the West, the migration to the cities during the industrial revolution, the movement out to the suburbs after the World War II, and so forth. That has changed in recent years.
The main force driving change today is technology. The wide-spread adoption of the Internet, Smartphones and other mobile devices, and social networks has put the consumer in control of the shopping process and has caused retailers to switch from pushing products to customers through their stores in the cheapest way possible to engaging consumers across multiple channels to better understand and accommodate their individual paths to purchase. As a result, retailers have scrambled in recent years to shore-up their execution and fulfillment capabilities across channels. However, you can’t simply execute your way to greatness. Retail planning practices such as assortment planning can make multi-channel execution more effective and profitable. I asked our panelists to share their experiences with assortment planning.
Linda, what are the biggest barriers you see for retailers in developing assortments that truly appeal to today’s customer?
Canada: I don’t know if it’s a barrier, but a key challenge is the precision with which the customer wants us to speak to her needs. She wants us to know exactly what she wants, when she wants it, the color she wants, the size she wants. The customers walking into our stores today are often more equipped with information about our products than our sales associates. She has researched it, read the reviews, and has checked with her social connections. So building a supply chain planning process that anticipates what she wants even before she knows she wants it is a big challenge for retailers today.
Another factor is that we have three distinct generations shopping in our stores today. Baby boomers have a very specific way of shopping, as do the gen Y’ers. Then the Millennials are all about how fast you can deliver exactly what I want. So there are a lot of challenges in understanding our customer and delivering exactly what she wants.
McAbee: I agree, the days of being able to leverage assortments designed to give us the greatest ROI are over. If the customer doesn’t find what they want, they’ll just walk out of the store.
Atenasio: I would just add that if you don’t have that first item they want when they come in your store, you never have the opportunity to up-sell them to more profitable items.
Welty: As Linda said, the consumer has so much more visibility now, making them more aware not only of our product, but of the competition, and putting tremendous pressure on retailers. My question for Mike is, how has this consumer dynamic impacted your overall assortment planning process?
McAbee: You have to understand that we are a chain of small rural stores where we face any kind of competition maybe 20 percent of the time. The rise in mobile commerce and customer engagement has changed the landscape for us dramatically. On top of that, the major premium brands we carry such as Nike and Under Amour have started their own direct-to-consumer businesses. We have brand-loyal kids who shop our stores who only buy Under Amour. They now don’t necessarily have to come to Hibbets to buy Under Amour, they can go direct to Under Amour. What this means for companies like us is you have to narrow your assortments. You can no longer afford to carry eight or nine colors of each item. You have to narrow it down to those colors selling best in each store or cluster of stores so you can provide that convenience for the shopper so they can get what they want today and not have to wait for the shipment.
Canada: I agree, the assortment online is tremendously broad. But you can’t afford to carry a lot of inventory in the stores. So we have to assort to the local customer and look at how we leverage inventory across the enterprise. We have started shipping from stores to give the customer next-day delivery of anything she sees across our enterprise.
Harwood: That brings up another barrier. A lot of people don’t have that level of data from their stores and their planners don’t have the ability to assort to that level, so they can’t make meaningful decisions. Also, is the data they have actionable? Too much data can lead to analysis paralysis where they don’t know what to do with the data they have.
Beck: A lot of the companies we work with are now looking at their organizations pretty carefully to grasp what to do with those assortment decisions. Are they aligned properly with one person with eyes on a product all the way across the organization? Are they channelized or productized—how are they focusing on those decisions? They may not have the shared knowledge or ability to affect those outcomes.
Welty: We will continue to share our expert panel’s insights in our next blog post launching Thursday, June 26.
To learn more about DSW’s assortment planning process, view this video interview of Linda Canada by Retail TouchPoint’s Alicia Fiorletta: