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Win Over the New Value-Based Consumer with Next-Generation Assortment Planning
Excerpted from an article to appear in Apparel magazine.
In the face of unprecedented changes in the economy, consumers are undergoing a radical transformation as they move from consumption-based to value-based purchasing—which in turn is forcing apparel retailers to transform assortment planning to meet this new reality.
In recent years, record levels of consumer demand could make up for planning errors. But consumers, especially in the U.S., are profoundly rethinking their spending habits. In fact, the U.S. Bureau of Economics indicates that the national savings rate, which had actually dipped into negative territory, surged to almost 5% by January 2009.
The new, value-based consumers need far more convincing. They are willing to wait longer for markdowns and are less tolerant when it comes to not having the right size or color on hand.
A New Paradigm for Assortment Planning
Before the current sea change in consumer sentiment, assortment management tended to understand customers in terms of averages. For many years this approach was reasonable since retail was an industry that was scaling quickly, fueled by the epic rise of the consumer's contribution to gross domestic product (GDP).
While this represented a golden age of growth for retailers, it also left in its wake a planning process that is often fragmented, manual, overly reliant on historical data, and lacking in analytical rigor.
Today, the era of value-based consumers demands that apparel retailers end the traditionally siloed approach to planning. Instead, retailers need flexible processes with strong links to financial planning and execution systems.
For example, companies must develop a sharp focus on in-season management, not just pre-season. In addition, buyers and purchasing professionals must be able to holistically analyze assortments from an item-planning perspective, then automatically re-project and re-plan assortments down to the item level.
Step by Step
To make it all work, retailers need to break up information silos, adopt more sophisticated analytics, and arm buyers with exception-driven, role-based workflows infused with real-time updates.
This is a tall order, especially in the current economic climate. But, in fact, case studies have proven that bottom-line improvements can be achieved quickly.
What's the secret? Systems that can be implemented in a modular fashion: analytical tools that uncover actionable insights quickly and a technology partner that understands customer-centric assortment planning and drives the transformation process with business value in mind.
Learn more about Oracle solutions for customer-centric assortment planning.
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