3. HD MERCHANDISING | 3
While technology and innovation flourish on the consumer side of
fashion, inside headquarters, not much has changed in years. As if
in a permanent homage to retro, the way in which merchandising
and planning groups work and the systems they use have barely
evolved from the three-ring binders and green screens of the 1970s.
Merchants and planners, many of whom grew up as digital natives,
navigate an awkward time warp: They commute from the consumer
world to offices that stifle their skills in interpreting and acting on
visual, interactive data and tools.
That’s all changing—radically.
If consumers made decisions like retailers …
4. 4 | HD MERCHANDISING
Merchants are getting into the technologies their
marketing colleagues are using—and they’re pio-
neering new ways to use these technologies to
transform how they work, and how fast, by bringing
more clarity than ever before possible to key mer-
chandising and planning decisions.
Last night, your retail buyer rallied friends for dinner
via Facebook, made an OpenTable reservation based
on Yelp reviews, chose her outfit by querying Pinter-
est and asked Siri for driving directions. Her life and
the way she makes decisions are informed by tech-
nology that’s engrained into the way she lives.
But when she arrived at work this morning, those
richly designed mobile interfaces, fed by smart,
dynamic artificial intelligence learning tools, were
absent. Her power to translate real-time data into
fast decisions went dormant for the day, and she
faced the important task of driving her organiza-
tion’s assortment performance using analog tools
equivalent to the Yellow Pages, rotary-dial phones
and rabbit-ear antennas.
The opportunity is significant. While consumers
have long since adapted to a more visual, data-
driven and connected retail experience, most
retailers have been incredibly slow to adapt data
mining, predictive analytics and data visualization
tools within their organizations, leaving merchants
to rely heavily on best guesses and instinct. Fur-
ther, the information traditionally shared among
merchants, planners and vendors doesn’t always
translate clearly across stakeholders. Various feeds
of visual and analytical insights often interfere with
one another, creating static rather than combining
into a clear picture.
Pioneering brands and retailers are bringing sus-
tainable growth opportunities into focus by adapt-
ing the machine-assisted discovery and decision-
making technologies that exist in the consumer
space to retail management.
As they do, they are upgrading to high-definition
tools with the functionality and intuitive experience
employees have come to expect from technology
they use in their daily lives. These HD merchandis-
ing tools:
1. Help employees visualize product and
attribute trends
2. Guide employees to new discoveries and
previously hidden relationships
3. Give employees the power to interact and
collaborate the way they do in social and
consumer spheres
4. Connect employees and business partners
around the globe in real time to make better,
faster decisions together
VISUALIZE
Consumers buy based on what they see. But in
deciding what to offer them, merchants and plan-
ners have been stuck in a process that disassociates
product appearance from performance. It’s not pos-
sible for merchants and planners to fully integrate
their respective visual and analytical skills when
hot-selling metallic ankle boots are reduced to a
spreadsheet cell labeled Style 7035276. Innovative
retailers are merging financial science and visual
art by incorporating interactive digital product im-
ages into planning software and analytical decision
processes, rather than wading through SKUs and
spreadsheets and then transitioning to product
sample rooms.
The days of 1970s-legacied “Monday Morning
Reports” filled with rows and charts (even visually
striking ones) will finally pass as digital-age per-
formance reporting adapts to reflect our photo-
centric culture, as illustrated in Exhibit 1. Interactive
product imagery that is tied to financial perfor-
mance metrics is enabling merchants and planners
to glean deeper insights quicker by seeing trends
instead of drudging through endless rows of data.
Statistic-informed visual trend discoveries are driv-
ing more compelling assortments and simultane-
ously forecasting their profitability. These shifts
5. HD MERCHANDISING | 5
Exhibit 1: Using images instead of spreadsheets blends the art and science of merchandising
and planning, enabling faster, better buying decisions.
SEEING IS MORE THAN BELIEVING
are resulting in measurable performance improve-
ments, including 10% to 20% increases in inventory
productivity and up to 15% fewer hard markdowns,
through decision-making processes that are 30% to
40% faster.
GUIDE
Merchants and planners used to base decisions on
limited information that was often a year old. They
now face the opposite problem—relentless streams
of desultory data. No human can aggregate, digest
and act on such a flood of inputs, leaving mer-
chants and planners humming along to white noise
and no better at making decisions than in the past.
The call to action for process designers is to
dramatically improve the tools that guide teams
to discovery. Fortunately, technology has caught
up. Behind-the-scenes data mining now provides
automated recommendations to guide merchants’
and planners’ focus to key areas for evaluation,
6. 6 | HD MERCHANDISING
using statistics to correlate product, location and
customer attributes with performance and finan-
cial metrics. Rather than spending time finding
and crunching data that may or may not provide
actionable results, merchants and planners now rely
on software to data mine and to automatically sug-
gest mathematically intelligent actions. Automation
flags business opportunities in real time that might
otherwise have been blurred among the static of
spreadsheets, report binders and sample racks.
(See Exhibit 2.)
This guided interaction with data lets planners fo-
cus more on strategy, improve their processes and
deliver better recommendations faster. By doing
so in the shared language of digital product im-
ages, merchants are further able to understand and
apply planners’ recommendations on SKU breadth,
assortment mix and segmentation. For example,
Exhibit 2: Automated analytics can uncover multi-attribute relationships and trends that
manual scans miss, such as the outlier performance of these shoes in cold-weather stores.
FINDING OUTLIERS AMONG TOP PERFORMERS
7. HD MERCHANDISING | 7
wholesalers can make more informed and easily
understood recommendations to retailers regarding
pre-season product selection, quantities and alloca-
tions, and in-season re-orders, resulting in faster
order decisions and fewer missed opportunities.
High-def guidance also helps merchants and plan-
ners coordinate with marketing by easily sharing
images of real-time top sellers that are available in
inventory so the products that anchor the retailer’s
home page or catalog cover can be the ones with
the most financial potential right now.
INTERACT
Consumers have been conditioned to expect
dynamic screen interactions. We hover our cursor
over digital images knowing we’ll see additional
information. We click photos, and new windows
of product details appear focused solely on the
selected product—yet it is only now that merchants
and planners are leveraging such functionality to
make business decisions.
On the planning side, such technology allows
access to point-of-sale data that updates, reor-
ganizes and filters images—not codes—on interac-
tive reports. The days of scrolling to spreadsheet
cell AC36 for a statistic on Style 7035276 have
gone the way of weekly printed television listings,
replaced by dynamic images tied to instantly view-
able sales data.
On the merchandising side, images that can be
dragged and dropped let merchants digitally
manipulate assortment plans until an optimal
visual and financial mix is achieved, as illustrated in
Exhibit 3.
Decision-based analytics, guided recommenda-
tions and the more intuitive, shared language of
dynamic photos lend themselves to mobile com-
munication in ways spreadsheets and physical
samples never could.
In Jan. 2015 at the National Retail Federation’s Big
Show, R. B. Harrison, chief omnichannel officer at
Macy’s Inc., discussed his approach to evolving
Macy’s in parallel with consumers’ changing pref-
erences: “A couple of years ago, we would focus
on the desktop environments, and then if we got
around to it, we would try to figure out a way to fit
it into a smaller format, mobile or not. In the last
two years, we’ve shifted all of our primary develop-
ment to a mobile format. And we’ve built it specific
for a phone, specific for a tablet, trying to give a
technically relevant experience,” he said.
This strategy for responding to consumers is the
strategy that should also be deployed to retail
employees. Mobile technology unchains merchants
from their desks, allowing them to spend more time
visiting stores, competitive shopping, network-
ing with vendors and observing consumers while
simultaneously working directly with one another
to make critical business decisions.
CONNECT
Accustomed in their personal lives to instant mes-
saging, video calls and group feedback on daily
decisions, merchants and planners are now finding
the same connectivity at work. (See Exhibit 4.) Tak-
ing assortment planning, line reviews and style-outs
digital enables teams to better collaborate across
geographies and functions, share trends and in-
stantly identify cross-merchandising opportunities.
Travel downtime between market appointments is
now used to participate in virtual style-out meetings
and to remotely approve open-to-buy requests.
Merchants and planners are also incorporating
social media insights into their processes. They are
crowdsourcing product feedback both internally
among colleagues and externally among consum-
ers. They’re using tools to crawl blogs and product
reviews for new consumer vernacular. Retailers
are using these near-real-time insights to inform
8. 8 | HD MERCHANDISING
product sorting and segmenting for past-season
performance hindsighting and future-season plan-
ning. This concept of dynamic attributing allows the
consumer to drive how products are grouped and
reviewed by merchants. It also helps retailers talk
to consumers in their language, and merchants and
planners should be speaking that same language
when planning assortments, reviewing product per-
formance and gleaning insights from past seasons.
“The language that we actually use when marketing
comes from language that we hear in our reviews
and social media,” Diane Ellis, CEO of The Limited,
said in a 2015 NRF Big Show omnichannel panel
moderated by Kurt Salmon partner and retired
Macy’s CAO Tom Cole. “Many times, we tried to
come up with great descriptors for a product—why
the fit is great or why a particular style—and it didn’t
necessarily resonate with the client. But being able
to leverage her testimonials—use the actual cus-
tomer language about the fit, style, fashion—really
was important to her. We can then bring that into
our language.”
Exhibit 3: A dynamic interface with drag-and-drop capability translates performance analyses,
PLM and style-out inputs into a balanced, profitable and visually appealing assortment.
FROM STATIC AND SLOW TO FAST, BEAUTIFUL CLARITY
9. HD MERCHANDISING | 9
Exhibit 4: High-definition assortment building lets teams collaborate remotely and visually,
resulting in more compelling and cohesive assortments across the selling floor.
IDENTIFYING CROSS-MERCHANDISING OPPORTUNITIES IN REAL TIME
BENEFITS AND WHERE TO START
Only a handful of companies have started the
switch to high-definition merchandising, but it will
soon become the standard, and the results are
startling. The most public example to date has been
Tommy Hilfiger’s announcement of a digital show-
room that eliminates the need for samples. “Tommy
Hilfiger is sounding the death knell for the physical
showroom,” Women’s Wear Daily declared in Janu-
ary. While this is only one aspect of HD merchandis-
ing, Tommy Hilfiger says, “The return on investment
on a digital showroom is lower than one year, with
a cost roughly equivalent to what the company
would spend on samples in a 12-month period.”
Other retailers and brands, having liberated the
stifled digital natives among their merchants and
planners and converted the static and snow of
desultory data to profitable, high-def clarity, are
achieving sales increases up to 5% and turns im-
provements up to 20%.
10. 10 | HD MERCHANDISING
The roadmap to execute this move to high defini-
tion varies depending on each organization’s start-
ing point and priorities. Each of the visual, guided,
interactive and connected advancements yields
incremental business improvements that, when
woven together, create a truly revolutionary model
fit for today’s digital world. v
11. HD MERCHANDISING | 11
ARE YOU READY TO TRANSFORM
YOUR MERCHANDISING AND PLANNING
ORGANIZATION?
We are currently recruiting additional retailers to pilot HD
merchandising. The pilot involves:
• Selecting the category and HD merchandising
components to pilot
• Conducting the pilot with the selected category
• Measuring tangible benefits
• Outlining a clear ROI and payback period
• Defining the future roadmap
Kurt Salmon has vast experience helping retailers
transform their operations into competitive advantage.
Because our team is made up of industry experts, we
understand that merchandising and planning are at the
heart of how retailers and wholesalers meet the needs
of their customers. We have delivered over 50 projects
focused on merchandising and planning in the past two
years to a client list that includes the world’s top retailers
as well as smaller emerging chains. Well beyond concepts
and theories, our delivery model is anchored in providing
measurable and sustainable results.
Contact Brooks Kitchel at brooks.kitchel@kurtsalmon.com
to learn more.
