2. Merchandising
As a merchandiser you wear many hats, including
selecting new products and ensuring those
products get to the right selling location whether
in-store or online.
In addition to this, you are expert curators in
charge of monitoring current and past
performance, planning, forecasting, allocation.
Your ability to multitask is your biggest asset, and
this serves you well when communicating and
coordinating with the Design and Buying teams (to
name a few!)
So with all that work on your plate, let's talk about
ways to make your process more data-driven...and
streamlined!
3. Each Step Along the
Merchandising Planning
Process
Develop Your Buying Plan
and Forecast
Define Exit Merchandise
Strategies
Allocation
Ongoing Performance
Evaluation
Review Past Performance
SS'18
4. Real Life: Merchandise Planning Example
...and tools to help!
You are an established e-commerce retailer in
the womenswear business.
In both 2016 and 2017 you offered a limited
swimwear collection. After seeing profitable
seasons and positive customer reaction, your
company would like to expand the assortment
for 2018.
Since swimwear is a highly seasonal item,
there are challenges to executing the planning
lifecycle but there are tools you can use to
overcome these challenges and successfully
meet your expansion goals.
5. #1 Review historical performance
#2 Look forward and identify strategic
market opportunities
Planning Your Process
6. Looking at last year's sales, what were your volume drivers?
How did both core and trend items perform? Specifically, did you buy too
little or too much into a particular trend or key item?
In which categories (and sub-categories) were you left with excess
inventory?
What sold at full price versus deeper-than-anticipated discounts?
Where did you miss sales opportunities because you couldn't convert
customers? Where in the funnel did the drop happen?
What were external region and seasonal events and trends that impacted
top and bottom lines?
What are the relevant shifts and changes in both the competitive
landscape and customer demographic for which you need to be
prepared?
Key Data Points To Consider
7. Not only is your company's past sales data useful to planning your future
assortment, so are your competitor's patterns within the same category.
Swimwear has a short seasonal selling
period and is also trend-driven. Getting the
assortment right begins with reviewing what
happened last year not only within your own
company but competitors in the space.
With your past sales data you can
understand which products sold out fastest
and which were left on heavy discount at
season's end.
One key question to ask is, "When did your
competitors introduce new products and
when did they stop?"
Review Past Performance
8. Develop Your Buying Plan and Forecast
Now that you have a clear understanding
of historical performance, it's time to roll
up your sleeves, (grab some coffee), set
your assortment plan and forecast.
9. Forecasting: Data Points To Consider
Drilling down to the product attribute level, what
are the products and their features that will
maintain customer retention and drive new
customers to your brand?
How much of the assortment should be core
products and how much should be dedicated to
new and trend offerings?
Looking at the competitive landscape are there any
gaps in existing product categories that should be
filled? Are there any new categories that should be
represented in but aren't currently?
By season, what are the new trends that must be
represented in the assortment and when should
they be introduced to maximize sell-through
How deep will your trend offering be and which
specific categories will represent these trends?
Should there be differences in allocation by
geography?
10. Looking Forward: The Details
You have to stay abreast of influencers and emerging fashion
to understand what is trending early.
However, also being able to identify these trends on an
attribute level is significant to setting up your assortment
intelligently.
Strapless? Off-shoulder? Ruffles? What about color?
Understanding this granularity is key to getting your
expanded swimwear assortment right.
Find out which styles year over year have performed well and
what competitors are introducing them again this year.
11. So, what does this year's assortment look like?
Looking at the total assortment, it appears
that one-piece swimwear is almost as
important as having an extensive top
offering.
We can also tell that cerulean blue is the
trending accent color - next to the ever
popular black and white.
12. Merchandise Exit Strategies
You have an assortment framework in
place at both the category and item-
level, so how do you plan to move
product through seasons at maximum
profitability?
13. Data Points To Consider
At the item and category-level, is your pricing aligned with
the market?
With your target consumer in mind, for which specific
products should you be pricing at a premium, and where
should you operate on narrower margins?
What is the average number of days it takes for items to sell-
through?
What are seasonal events that can lengthen or shorten the
average number of days to stock-out?
What is the average number of days, for both core and trend
items, between product drop and first price cut?
At the category and item-level, historically and relative to the
competitive market, have you marked down too early or too
late?
14. Optimized Pricing: Art + Science
Now you need to carefully price your assortment, especially
because you only have a short period to move through stock.
You don’t want to be stuck with swimwear inventory in
September that will no longer be relevant in the following
seasons because of over-pricing.
Yet, preserving margins are essential to a successful albeit
short swimwear selling season.
Let's look at the data.
15. How do you know if your price positioning is optimized
relative to the rest of the market?
Looking at the current market, pricing a bikini set around $68 and
a one-piece around $131 would place yourself in the middle of the
market.
Have room in your margin to move inventory faster? Try $49 and
$119 to make yourself even more competitive.
16. Allocation
Proper allocation requires a forecast
underpinned by historic data, as well as the
flexibility to shift as the market does.
So what does an allocation strategy that
maximizes your profits take into account?
17. Allocation: Data Points To Consider
Is your allocation strategy based solely on location? Grouping by geography
and historic sales volume is the first level, but there are also deeper shopper
level insights that should guide allocation (and marketing initiatives).
Are you considering the local competitive environment into your allocation
plans?
Are there trends which are showing more activity and traction regionally? How
are you going to allocate (and work with marketing to promote) them
accordingly?
Which regions are consistently over- or under-performing on key categories and
items? Where do you need a buffer or less stock in place?
Are you accounting for weather (historic and forecasted) and local events into
your allocation plans?
Do you have a plan in place to replenish and shift merchandise, as needed, mid-
season to markets that show higher sales volume?
18. Always on the clock!
Your e-commerce business is global
and runs 24/7.
But how do you tailor assortment and
messaging to hit the right local
notes?
Let's take a look.
19. Local Market: A Case In Point
Take for example the swimwear
assortment across three very
different markets below. Being able
to pull this data quickly allows you
to react mid-season if your
allocation is off. In this case, there
may be more of an opportunity to
increase allocation in Australia as
opposed to Spain.
A specific category like
“swimwear” may overperform in
a country like Australia and
underperform in, say, Norway.
Recognizing the patterns in
global performance is tricky
when considering allocation.
Cultural preferences, climate,
and local competitors are
factors heightened in the
swimwear space.
20. Ongoing Performance Evaluation
A retail executive's work is never done. By
now you've utilized a lot of data to get your
business primed for success. Now it's time to
get a systematic plan in place to keep tabs
on the market and your products'
performance.
Here's what you should be constantly
checking.
21. Data Points To Consider
Have competitors introduced a product or category that you need
to fast-track into your assortment?
Have they taken a discount on a category that you're still
maintaining at full price?
Which items are selling through at full-price? Can you replenish
them quickly while still in demand?
Which item-level attributes are common across items selling out
at full-price? Can you iterate these in-season to leverage this
opportunity?
Aligning with marketing, is your promotional activity resulting in
a corresponding up-tick in sales? Are they aligned in volume and
amount with the market?
22. Monitoring Sell-Through: An Example
For swimwear, this should happen quickly to
capitalize on peaks in the short selling
season. Knowing which types of swimwear
and specifically which styles, according to
location, are selling out is helpful in
informing these decisions.
What's more, following this information
from your competitors can help you pivot
even faster and react if necessary.
Looking at the most recent sales patterns,
the penetration of the bikini and two-piece
set assortment is higher than other
subcategories in terms of sold out styles.
Looking further into this data, you can
determine which particular styles are
selling out amongst competitors in the space
to see if it is an item you should be carrying.
23. Takeaways: What Decisions Would
We Have Taken?
In our expanded 2019 assortment, we would be continuing to add new styles into
March, beginning as early as January to leverage vacation-goers needs.
The expansion of our previous offering would include a focus on black and white
styles and a healthier assortment of one-pieces in addition to our typical mix-and-
match bikini styles.
The bikini separates would be priced around $49 a piece and $119 for a one-piece, so
that our prices are competitive.
Looking at the global market, we would be sure to target countries such as Australia
that seem to be under-assorted by our competitors. In this case, bikini and two-piece
sets are selling through faster than the rest of the market - and now we know where to
to focus our replenishment!
24. With the right tools and data
insights, smarter and faster
category decisions along the
merchandise planning cycle are
within your reach.
