Much has been publicized recently about “The Retail Apocalypse”, or “The Death of Retail”, and the decline of many retailers has often been blamed on failure to evolve and embrace technology changes. While these click-bait headlines are definitely overblown, as evidenced by overall growth in the industry, it is true that some retailers have struggled, and even ceased operations, largely due to their being slow or unwilling to change with the times.
The use of advanced technology to facilitate better omni-channel retail planning is one of the biggest challenges modern retailers face. Although many retailers struggle to effectively plan, purchase, and allocate merchandise effectively without the help of sophisticated demand management software, basic spreadsheets remain in use, with 41% of retailers relying on them for store planning, 27% for assortment planning and localization, and 26% for space planning. However, Excel-based planning processes are no longer sufficient to survive and strive in today’s omni-channel, complex, and hyper-competitive retail environment. Spreadsheets worked fine in the past before the explosion of data required to plan multiple channels and right down to the store and store-keeping unit, or SKU level, but modern retailers need more intelligence to keep pace with the industry.
Retailers will gain the greatest ROI with solutions that allow them to tightly integrate their merchandise and assortment plans. Such plans reside in separate modules within some software platforms – or, they are created using spreadsheets. Either way, they are developed separately, resulting in a disconnect in terms of overarching strategy, production, and even marketing. Investing in a vendor that delivers sophisticated algorithms, and intuitive spreadsheet-like grids (that are familiar to users), and graphical displays can help address retailers’ greatest opportunities and challenges. Taking the guesswork out of pushing inventory to the optimal retail store or sales channel by ditching the spreadsheets and modernizing the process results in improved efficiency, better margins, fewer lost sales, happier customers, and more revenues overall.
Some of the benefits of ditching spreadsheets include:
- Smarter management by exception and better data visualizations
In a professional planning solution supported by sophisticated algorithms, dashboards, stoplights, and alerts, retailers can easily identify and visualize exceptions (such as potential out of stock situations, potential excess, etc.) whereas Excel involves hunting around for the right information. Using best-in-class demand planning solutions, exceptions can be identified through a filter wizard, which can dramatically improve planner productivity. These solutions can also use allocation rules to model performance criteria to determine the best placement of stock and quickly allocate inventory to locations where they have the best chance of selling to maximize selling potential.
- Continual refinement and agile adjustment of plans throughout the season
Modern demand planning solutions use the logic that allows them to read the business as it actualizes to compare the actuals of the business to what the forecast was in order to enable the system to readjust the forecast and to both recalculate and reoptimize the inventory as part of the allocation strategy. Retailers shouldn’t have to be held back by spreadsheets that require excessive manual intervention, nor should they navigate clunky, complicated software to solve their allocation problems.
- Scalability to support business growth
Most retailers believe that spreadsheets are fairly difficult to use and that they weren’t built to support the ever-changing needs of their businesses. According to Forbes, spreadsheets hide important information and seeing all the raw data at once makes it difficult to interpret what’s important and what’s not. Investing in a solution suite that has been organically grown and that shares one common architecture, database, and user interface, gives the ability for retailers to grow their businesses all while benefiting from the precious help of their trusted software provider.
- Strategic demand forecasts with actionable insights
Retailers use demand forecasts to ensure that there is a market for the products they put into their stores and that they will be purchased sooner rather than later. For new products such as ever-changing fashion lines, retailers should use attribute-based demand profiles to push new products to stores. They can then switch to a pull strategy in which inventory levels are adjusted automatically according to actual consumption. Turning raw data into actionable insights is of the utmost importance when it comes to demand forecasts, and error-prone spreadsheets weren’t built with the complex needs of retailers in mind. Modern allocation solutions can help retailers bridge the gap between push and pull strategies, ensuring that products arrive at the needed location. With 88% of spreadsheets containing errors, it is not hard to see how modern software-based allocation solutions can help minimize slow-moving products and lost sales all while contributing to profit margin growth.
- A structured, integrated process from planning to execution
Spreadsheets do not offer the structured process retailers need if they wish to gain a competitive edge. A professional demand planning solution gives retailers the ability to structure their processes from planning all the way to execution. What’s more, the pivot functionality to slice and dice data is now made simpler than ever across the strategic top-down plans and bottom-up assortments. More importantly, demand planning solutions offer a single version of the truth and a centralized view, making them far more reliable and efficient than spreadsheets.