Consumer expectations might be driving the retail market to a point of collapse – but professionals aren’t helping the cause – the impact is visible in the market, according to two recent research studies.
Retail professionals are overwhelmingly continuing to struggle to keep up with new platforms and the correlating data. A new JDA Software survey, “Voice of the Category Manager” revealed that retailers and manufacturers are playing catch-up to optimize predictive analytics to generate usable insights.
Conducted in April 2017, nearly 100 professionals responsible for category management and merchandising in North America responded to JDA Software’s survey in order to better understand the current state of the market. Participants’ roles ranged from director, analyst, manager, operations and merchandising. About half of respondents worked at a manufacturing company, a little over a third worked for a retailer and the remainder were employed at a national retail chain.
Despite increasing availability of platforms to crunch analytics, retailers and manufacturers are struggling to deploy meaningful strategies to synthesize the insights for improved and informed planning. “For many manufacturers and retailers, the survey results reveal that there is still room for improvement when it comes to their analytics processes. Survey respondents indicate that, on average, they are somewhat successful in mining consumer data to generate usable insights,” said the report.
According to the study, only 17 percent of respondents said they were highly successful in mining consumer data to map actionable insights. Conversely, 70 percent said that they were behind on maximizing predictive analytics to improve pricing and merchandising.
This has resulted in a greater number of discounted products this year, according to a separate study conducted by researchers at Edited. “There’s been a greater proportion of reductions with a 77 percent increase in products discounted by more than 50 percent off compared to last year, which is equivalent to over 53,000 products or an average of 475 items per retailer,” said Katie Smith, senior fashion and retail analyst at Edited.
Manufacturers are falling behind retailers in terms of analyzing available data – 83 percent said in the JDA study that they’re lagging compared to 55 percent of retailers – that’s leading to an over-saturation of fashion apparel, footwear and accessories, flooding the market and driving down costs. All participants named utilizing analytics for improved pricing and merchandising as the top segment where they’re falling short. Leveraging geographic and socio-economic data for targeted promotions or offers was the next area where respondents felt they were encountering the most challenges.
According to the JDA study, the goal of leveraging the data is to produce informed and improved merchandising, pricing and promotional efforts. “It turns out that the top two behaviors survey respondents are most interested in gaining insight into are the modern shopper’s path to purchase (67 percent) and price sensitivity (53 percent),” the report said.
And for good reason, traditionally high-performing segments aren’t delivering results, according to Edited. “Dresses and tops categories are performing the worst and are rife with discounts to clear out stagnant styles. Examples include cami or slip dresses (70 percent discounted by an average of 54 percent off), shift dresses (76 percent discounted by an average of almost 55 percent off), cardigans (nearly 69 percent off at average of 50 percent off),” said Smith.
To secure consumer satisfaction, loyalty and in turn, revenue gains, 68 percent of respondents in the JDA study are aiming to improve on personalization and localization strategies in the next year. Sixty-two percent are addressing the increase in development for digital technologies, the report said. Unsurprisingly, the respondents said that they plan to gauge the success of strategies through the increase of sales.
Local plans require corporate support and c-suite buy-in. “In fact, 86 percent of respondents believe that now, more than ever, in-store compliance with planograms is essential for success. While most respondents see the importance of in-store compliance with planograms, 37 percent of respondents report that they do not measure it,” researchers in the JDA report said.
As the role of the physical store shifts, central support will be required to implement changes on a regional scale. The report said, “Many respondents predict that stores will need more resources to provide additional options from headquarters (38 percent) and that businesses will begin to break down into smaller regions to allow for local customization (28 percent).”
In order to roll out these changes, the participants predict that they will be deploying new technologies – especially big data and predictive analytics and customer-driven data science. Fifty-eight percent of those polled said they plan to invest in customer-driven data science and 59 percent said they’d be spending on business analytics.
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