Even as several internal and external factors rewire core merchandising functions, retailers are restructuring the buyer and supporting team roles in order to best serve customers.
Central to the merchandising function is the merchant, also referred to as buyer, whose key role is to manage the sales and profit of each item. The traditional buyer role centered on selling products and services in physical stores by merchandising the ‘right products in the right stores’, recognizing and reacting to sales trends, designing promotional displays, and measuring item and category performance.
Today, the merchandising function led by the buyer, with support from category managers, pricing managers, replenishment managers, and finance, is experiencing transformation centered on serving the ‘global customer’ in an omnichannel retail landscape that includes marketplaces. Buyers and support team must deliver the right product, across the right format, at the right price, to the right customer, at the right time.
Core responsibilities of the merchandising function have gone far beyond traditional sales, profit, and growth. Newer areas of customer experience, personalization, faster go-to-market strategies, online item attribution and digital asset management, cross-channel analytics and insights, retail media networks (RMNs), and digital marketing effectiveness are taking center stage (see Figure 1). In addition to ever-changing customer expectations, the buyer and support teams must contend with aggressive competition, economic headwinds, geopolitical crises, supply chain disruptions and cost pressures, inflation, and labor uncertainty.
Executing the buying role and merchandising-related functions requires an understanding of customer behavior, competitor moves, and market conditions in real time. In this transition, retailers are restructuring the buyer and supporting team roles in several ways to best serve customers.
The lack of a single integrated analytics platform prevents buyers and merchandising support teams to make informed decisions with agility.
Buyers and merchandising support teams conduct strategic planning and analysis, monitor supplier compliance, prepare growth plans and annual budgets, and make product-level decisions. Access to real-time internal and external data is crucial for making faster, better, and continuously improving intelligence-based decisions. But today, they lack a single analytical integrated platform to manage their business.
The reliance on traditional siloed, legacy batch processing systems and manual processes is forcing decision makers to extract data from multiple systems to glean insights, conduct analysis, and generate reports manually, resulting in 30-40% non-value-added activities. Without advanced analytics capabilities, merchandising teams cannot perform what-if analysis to simulate business scenarios and assess the impact of different decisions on key business KPIs. The unavailability of role-specific dashboards results in significant overhead costs in managing merchandising workflows as well as missed opportunities in the marketplace.
The lost sales from these operational challenges lead to diminished relevancy, customer abandonment, and loss of competitive advantage. We have observed that retailers are losing significant business (5-8% in sales). In many retail organizations, the C-suite is actively embracing digital transformation and AI and asking, 'What’s next?' to unlock the value in enterprise data and put actionable insights in the hands of commercial decision makers.
Top-tier intelligent merchandising solutions help reimagine new ways of working with a decision intelligence framework.
By breaking down barriers in tools, processes, and teams, they empower merchandising teams in strategic planning, annual budgeting, ‘what if’ analysis, supplier performance measurement, and ad-hoc analysis, by answering ‘what, why, and how’ questions across many dimensions. They also augment operational human capabilities by automating routine activities; foster cross-functional collaboration; and democratize predictive analytics by putting analytics in the hands of the everyday user in merchandising (see Figure 2).
The benefits include everyday practical AI (actionable insights) through data accuracy and real-time data availability, customizable intelligence through advanced AI, customized user interface, and prioritized and actionable alerts and notifications, and supplier access (through security).
An intelligent merchandising solution will allow retailers to pivot to a modern system of engagement and hyperscale operations. We outline the key features of such a system:
The real power of intelligent merchandising solutions lies in their ability to take a holistic and integrated view and perform complex, routine, and ad hoc analysis of enterprise data to drive informed decision making.
Here are some examples of how such a system will provide actionable insights to decision makers:
To conclude, the cost of insufficient data, outdated processes, and legacy systems is just too high, and can lead to missed opportunities, plummeting efficiencies, and financial losses for the retailer. Intelligent merchandising offers a data science based approach that broadens the capabilities to predict outcomes and identify patterns, transforming decision-making in omnichannel retail. Through comprehensive assessment and targeted implementation, retailers can fundamentally modernize their approach to data-centric, insights-driven decision-making, empowering the business with agility, to respond faster to market dynamics while maximizing the value from their decisions, and ensuring people and systems work effectively together as technology evolves.
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