Some say the birth of electronic spreadsheets paved the way for merchandise planning in modern retail—the data-driven role dedicated to critical inventory decisions connecting merchandising, finance, production, and supply chain. It is therefore no surprise that spreadsheets continue to be the dominant technology supporting most planning activities even at multi-million or multi-billion dollar companies.
Now 30 some years after the birth of electronic spreadsheets, the world of retail has gone from mom-and-pop stores on the street corner, to powerful chains, global brands, and all things digital. I am curious: how has the highly analytical profession of merchandise planning changed (or not)? With the enormous amount of data now collected by retailers, how are planning experts upgrading the way they analyze and react to data for better decisions? What are new opportunities for planning technology beyond spreadsheets? What does the future hold?
Fortunately, we got to ask some of these questions to real experts and practitioners at a recent panel series we at 7thonline co-hosted with Kalypso in southern California. The events were themed “The Future of Merchandise Planning and Technology”, and we had a room full of planning, supply chain and retail IT professionals from companies like Oakley, Toms, Callaway Golf, 5.11 Tactical, Patagonia, BCBG, AG Jeans, Pacific Sunwear, Billabong and more. Over breakfast and basking in the unmistakable California sunshine, we got the conversation going about all things planning, and here are some highlights:
For today’s apparel/footwear/accessories brands and retailers, how has the profession of merchandise planning changed in the past decade and what is driving the change?
- At its core, the end consumer has changed and is changing. And this is driving most shifts in the industry. Consumers now demand more products, at a faster pace and more tailored to their needs. The changing consumer is driving a series of changes at a brand from marketing, product development, planning, and all the way to supply chain;
- As brands and organizations grow in size, the way merchandise planning has to interact with other departments is also changing. They are now playing an increasingly important and central role in driving collaborative decisions with product development as well as supply chain. Kelley Graham from 5.11 Tactical sees the importance for planning to help breakdown internal silos to better collaborate with merchandising, supply chain, and other departments.
- The amount of data that a retailer and a planner has to work with has also grown exponentially. But the challenge remains in terms of being able to interpret the data in meaningful ways. In addition to historical sales data, which remains the basis of analysis for planning, many are speculating the use of social media and other consumer insights into planning. Although it is not immediately clear yet how best to “translate” Facebook “likes” into quantitative inventory decisions today, there might be opportunities for machine learning to help us understand the hidden connections and their potential business impact in a quantitative way.
- For many companies growing in scale, many have started the migration off from spreadsheets and onto a systematic planning platform for greater data visibility and analytical power.
For companies who aspire to take on today’s challenges such as omnichannel retailing, what’s the best way to start the journey of transformation?
- “Starting with a clear vision” is what Sonia Parekh from Kalypso believes is the most important based on her years of experience working with retailers to embark on transformation projects. This vision will help lay the foundation for the necessary people, process, and technology improvements required.
- Oakley’s Rob Lauzon, coming from a technology and IT perspective, welcomes system upgrade and technology improvements for planning. He also highlights the critical importance of aligning business processes with new solutions for successful implementation and sustained business results. He also believes in finding a good technology partner because “your business requirements will change, but a good technology partner will adapt with you, and more importantly, bring best practices into the process. And that’s what you really want.”
- Chris Bonner from TOMS and Callaway Golf also commented on the importance of ensuring the health of data: with retailers often struggling with disjointed systems, business units like planning, merchandising, and supply chain might be looking at different numbers thus coming up with disconnected decisions that negatively impact the business. Making sure there is consistent data and accurate picture of the business is an important step to start. Having modern planning systems that are integrated with the other enterprise systems (ERP, PLM, etc.) presents a clear opportunity.
What is the role of technology in enabling modern merchandise planning to adapt to new opportunities?
- Having smart planning systems can lend critical help in calculating risks and uncovering opportunities at a large scale that humans cannot easily achieve. However, all the panelists agree even with all the advancement in modern planning technology (e.g. the user of algorithms and Artificial Intelligence, etc.), there is no substitute for human in business decision-making and the art of retailing.
- Dave Ryan of Concepts in Technology suggested that for multichannel apparel/footwear/accessories brands, better integration between retail and wholesale planning on a common platform remains a area of opportunity. Traditionally these channels are planned for separately on disjointed spreadsheets which created large inefficiencies in production, supply chain and impacted margins. Today, modern solutions are available for brands to unite these formerly separate planning silos for more visibility in inventory decisions.
What does the future hold?
- When asked “what super power do you wish to possess to achieve better planning”, our rooms quickly came to two answers: the crystal ball emerged with nodding heads, and the power to get everyone collaborate came with knowing smiles. Given these answers, it is probably safe to say no one really knows the answer to our theme question. Never the less, the participants were eager to exchange thoughts and comments with each other about better data, improved processes, system upgrades, and greater collaboration.
- The future of retail planning and technology, as I see it, is being created everyday by these practitioners, industry analysts, consultants, us technology vendors, and our collective selves as consumers. At least from where 7thonline stands, we hope to help create the kind of breakthrough that the first electronic spreadsheets generated for the industry: a data-driven world view and analytics-rich business practices that could change how the apparel/retail industry comprehend and take actions towards the ever-evolving consumer demand.
Photo credit: Thomas Adams