Fast-fashion retailers are having significant effects on the industry, particularly when it comes to planning and forecasting. Currently, we find retailers moving away from traditional season-based planning to year-round planning. However, it seems several retailers find themselves at a fork in the road, where they can choose to continue down the path of season-based planning or adopt year-round planning – the latter involving use of advanced technology.
The reality is that retailers that have yet to move away from season-based planning are having trouble identifying areas of opportunity. Throughout the planning cycle, retail leaders grieve about having to markdown excess inventory and recurring out-of-stock incidents. The answer here is to access external benchmarks in order to fine tune assortment and allocation to deliver an enhanced customer experience.
In Retail Moves from Seasonal to Continuous Planning penned by leading Forrester analyst, George Lawrie, he focuses on a number of factors retailers and brands are facing as they adopt the continuous planning model cycle. According to Lawrie, select retailers are trying to adopt new technologies to implement a continuous planning model, but lack the capabilities to fully implement due to:
- Inability to accelerate beyond the traditional steps of seasonal planning
- Lack of real insights from business intelligence tools and spreadsheets
- Inefficiency in tracking real-time consumer trends
- Ineptitude to look beyond historical data to mark impact of strategies
- Failure to identify missed opportunities
In the report, Lawrie breaks down the technology and strategies retailers and brands should look to implement to meet their customers’ needs and improve their margins. Important best practices include:
Plan Around The Customer
Rather than planning around categories or products, retailers should plan around the most attractive customer segments. To determine whom that is, retailers can measure expected customer lifetime value and simulate the impact of different strategies on key market segments that can be attained as a result of analyzing new streams of data. In turn, this will also lead to their ability to execute strategies on assortment, pricing and promotion,
Update Analytical Support
Data is only truly valuable if assessed by powerful analytics. Retail executives should move toward improving their analytic capabilities in order to unleash customer insight. Successful retailers are now managing their portfolio of buying options in light of emerging patterns of online searches, sales and returns. Regardless of how great their plan had been architected, once executed it requires timely, granular feedback on its performance. Ultimately, merchandisers must encounter insights that allow them to follow up with corrective actions. That is the very definition of prescriptive analytics, where merchandisers become more than just witnesses of how their lines are performing and why - they are now provided with insights as to improving those outcomes.
Mitigate Factors Constraining Continuous Planning And Execution
The report argues that retailers should “root out the real and assumed reasons for planning and buying complete seasons of merchandise in advance,” as they are often out of date. In fact, such a premise is related to how many traditional retailers refrain from looking beyond their historical data, which (as previously mentioned) is keeping these organizations from fully implementing new technologies.
DynamicAction is proudly highlighted in this report, as a vehicle to untangle these problems by connecting channels and identifying profit opportunities that can be managed through marketing strategies and inventory assortment. Download the full Forrester report [here] to learn more about the steps you can take to move towards continuous planning to meet (and exceed) your customer expectations.