CHICAGO — Canadian apparel retailer Reitmans intends to use technology for merchandise planning.
The $735.5 million retailer said it would announce today that new software will help staffers refine assortment and allocation to better match demand in each of its 874 stores. Executives, who had relied on limited historical sales data — and their own intuition — are to begin using the new tool this year.
The software, from ProfitLogic of Cambridge, Mass., will allow Reitmans to plan merchandising on a store-by-store basis, which is not possible using existing manual systems, said Diane Randolph, Reitmans’ director of merchandise business processes.
“Our current tools only allow us to look at last year and apply merchant instinct and knowing new trends to plan the next year,” she said. The solution “looks at our data, and looks at our 870-plus stores, and crunches the data to present to us a scientific recommendation that we can then blend with our art of retailing to come up with the best possible [selling] opportunities.”
Trends and patterns unique to Reitmans will help identify what drives demand. The information will be built into the software so planners can use it instantly. The technology generates recommendations on what styles and quantities a store should receive. If black garments always sell out in a particular store, Reitmans will know it.
Matching the right garment sizes to the right stores also has “exciting” potential, Randolph said. For example, Reitmans already knew that smaller sizes were in high demand in both Quebec and British Columbia — and merchandise planning was adjusted accordingly. But ProfitLogic’s analysis revealed pockets of stores in other regions that also favored small sizes. “We were missing opportunities,” she said.
Planners using the software will be able to factor into their forecasts variables that could not have been considered before, such as whether the fabric in a garment is stretch or nonstretch. In the tricky area of apparel sizes, the stretch factor can influence demand for a particular item, Randolph said.
She did not disclose the cost of the software.
Reitmans’ test of the software revealed a missed sales opportunity. Data from 2003 sales for three of Reitmans’ six divisions — juniors’, a plus-size chain and the main Reitmans banner — were fed into the system. This was the same information planners had available to forecast the 2004 season. Reitmans wanted to compare the software’s suggestions with what planners recommended.
Using manual methods, staffers evaluating the 2003 data recognized that early stockouts and size breaks in one key item sold in the Smart Set juniors’ division had cost Reitmans sales that year. For 2004, they boosted quantities 20 percent. The software, however, recommended a 40 percent increase, Randolph said.
“And when we looked at the results from 2004, we realized that was dead on — that 40 percent [quantity increase] would have been the right number,” she said.