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
In Part I of this series the panel discussed the main challenges retailers are facing today and how assortment planning can help address those challenges. In the following, we continue to excerpt from those panel discussions with questions concerning social media and change management.
Welty: Jon, what is your point of view on retailers utilizing social media in merchandising strategy to better engage and align with customers’ needs?
Beck: I have seen pockets of brilliance out there where some companies have focused particularly well on certain aspects. Some heavily branded companies have marketing departments developing social programs with analytics, understanding how to speak to the consumer and filtering through likes and dislikes to get a read on the market. Like any other new information, we’re trying to figure out how to quantify it for use in decision making. I’ve never seen it being used as a line item in merchandising, but some people are using it for promotional activities to drive programs and identify trends. It is evolving and will be growing over the next 5-10 years as these processes and technologies mature to help produce better business decisions.
Canada: We also use social media to engage our customers in decisions—have her vote on a style or color or which one she likes best. We then incorporate that into our buying decisions. Historically, shopping in stores had a social aspect, but now that is happening online. We are trying to engage our customer online through social media as a reason to come into the store. There are a lot of ways to leverage this, but you have to engage them from a social perspective.
Atenasio: It’s coming and we in retail need to understand what we can do with it. What do we learn and how can we put that into our assortment. It’s nice to know they voted on something, but is the East different than the West? Is the South different than the North? Once you find that out you can put that into your assortment because you can’t have just one assortment for the whole country anymore.
McAbee: You have to focus at the local level. For example, we have to know the school colors of the local sports teams. If we have apparel in the colors of the high school in the next town over, it won’t sell.
Welty: You see some of the largest retailers in the country spending millions of dollars on understanding what the customer is saying. The fastest growing type of software over the coming years will be pattern seeking applications that can discern patterns by location and other groupings out of the millions of pieces of data out there. Then you have data that you can actually use to help shape your plans. Today that information flow is still one-way, from the retailer to the consumer, but eventually with things like crowd-sourcing we will be able to work with consumers to jointly develop plans that will be much more effective to execute. When you think about the lifetime value of a customer, you have to start factoring them into the planning process.
Harwood: A lot of companies try to cluster things together and plan at a group level. I think what we are now looking at is many more attributes, and social will be one of the inputs to those numbers. As you get to those lower levels and many more numbers, technology will be critical.
Welty: Speaking of that Andy, as we are trying to change to become more consumer focused in our planning processes, how important is change management in taking your processes to a lower level and what advice do you have for the audience?
Harwood: It’s critical. Assortment planning itself is one thing, but if your planning team can’t support it, then it doesn’t really get you anywhere. When you think of things like merchandise planning, you can do those rather quickly. But Assortment planning is a multi-year engagement that impacts the organization top to bottom. During that multi-year process you could have a leadership change and they may not have the same vision for this. If they are coming in in the eighteen month, that is going to impact you. So it is crucial that you take it top to bottom; leadership has to be engaged. You are building these foundational steps for the future, so if you have a leadership change it is really hard for them to get their head around this. It’s an evolutionary process. They are already working 15-hour days and then you come in and want to change things. So you have to be engaged with them consistently from day one all the way through the end of the project. You have to show them what is in it for the organization and keep their eyes on that prize.
Atenasio: Within that change management process it has to be communication, communication, communication. From the highest levels that you talk to all the time down to the assortment planners who are building the plans every day, you have to get them on board. You have to have open meetings throughout the multi-year process to get them to buy in or else they will just go back to their spreadsheets and doing what they always did before.
McAbee: You have to remember this is a multi-year learning and adapting period. You have to help people constantly evolve to the new way of doing things. Even 4-5 years in now we are still adapting. We’re in the assortment game now and we have to evolve. It impacts every area of the company.
Canada: Most companies implementing assortment planning are already successful companies. They have processes in place that work for their business. Now you’re asking them to change. Change management creates the need to sit side-by-side with associates so they have the confidence the answers the “black box” planning system produces are better than what they can do on their spreadsheets.,. It’s an investment.
Welty: Thanks Linda, and thanks to our entire panel for your insights.
To learn more about assortment planning from our panelists, access these video interviews.