A recent survey by retail consulting firm RSR reveals that there are major changes occurring in the retail industry concerning the overall approach to merchandising, inventory, and product positioning. The best retail performers are leveraging available technology to streamline their inventory of goods to target the specific habits, needs, and expectations of specific communities. What have resulted are boosted sales and a reduction of overhead due to tighter cost controls.
According to RSR, a strong indication of retail performance in the survey was the degree to which the business embraced specialized computer software tools, both to manage merchandising and promotions, and also to analyze trends to inform strategy development. Not surprisingly, one of the most influential tools used was forecasting, which helps to predict customer buying trends to optimize and streamline inventory and reduce overhead. In fact, 75 percent of those retailers included in the survey cited retail forecasting as a major component in their success.
Another important tool that predicted retailer success was customer analytics, which can really give the retailer an inside look into their target audience. The data collected from this type of system plays a critical role in helping retailers to define who their customer segments are, identify their particular needs, and configure their merchandising and inventory approach to meet those requirements and expectations.
The RSR study essentially categorized retail enterprises into “winners” (who demonstrated year over year sales improvements), “average” (who met the industry standard of 3 percent growth) and “laggards” (who saw minimal growth or no growth whatsoever).
A critical analysis of those retail businesses that fell into the “winners” category revealed an ability to diversify and place more emphasis on different aspects of their businesses, including promotion optimization, planning allocation, forecasting, assortment optimization, and price optimization. Here, the success that businesses experienced was not necessarily driven by the quantity of promotional activity but rather via an emphasis on strategic promotion: so that sales and specials that were offered not only generated an immediate jump in revenue but also supported long-term expansion and growth.
Sherman, Erik. “How High-Tech Is Changing Retail.” Inc. 8/30/12. (8/31/12.)