This is the second article in our series based on a research report JustEnough (now Mi9 Retail) recently sponsored with Boston Retail Partners into the current state of the industry around Merchandise Planning and Allocation.
Here is part two:
The value added by employing formal planning processes is not going unnoticed in today’s retail market. Of the retailers surveyed, 89% undertake a formal merchandise and financial planning process, which is up slightly from 85% in last year’s survey.
Formal Planning Processes
In addition, over half have formalized store planning, allocation, and assortment planning processes. Advances in planning tools have certainly supported a wide range of merchandising and planning capabilities, and will increasingly continue to do so with the expansion of technological network developments in the retail environment.
Despite this, more than 60% of retailers still maintain separate assortments and separate inventories for different channels. Brick-and-mortar locations are still operating largely independently from e-commerce and vice versa. Further, collaboration with marketing initiatives is minimal, with only 32% of retailers managing marketing concurrently with planning.
The significant business opportunity to leverage business intelligence came to light through the survey results. Respondents claimed they most commonly use basic reporting and analytics capabilities to obtain performance data. Only 25% are using business intelligence for cross-channel planning, indicating the existence of a large improvement opportunity for retailers when analyzing their financial performance.
The balance in staffing plans and right-sizing the ratio of buyers to planners seems to have been struck. Organizationally, only a low percentage of respondents are planning to increase staffing of buyers and/or planners. That being said, assortment accuracy remains a concern for retailers. When asked to identify their business priorities, 67% of respondents identified enhancing assortments as one of their top 3 priorities.
Not surprisingly because enhancing assortments is a top priority, 65% also plan to upgrade or replace their assortment planning application within three years. These figures evidence a desire on the part of retailers to get their product offerings right. Taken together, the strong focus on micro-merchandising paired with the desire for enhanced systems reveals a growing appetite to rely upon technological efficiencies instead of increasing headcount.
Top 3 Priorities