9 retail merchandising trends to succeed in a post covid world

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The traditional merchandising approach has always relied on a combination of experience, skill, and guesswork. Although this has been the ‘least bad’ option available, it has always had less than perfect results.
In today’s current environment, and with the advances in technology, it is now possible to make better merchandising decisions (which are backed up with data), and which are more effective at meeting customer demands.

But what does this mean for the current process of merchandising, and how can merchandising support the sales process with new methods that better serve the customer? Let’s see what the next trends in merchandising are, and what you can do to succeed in a post-pandemic world:

The entire merchandising process is undergoing an evolution as more roles are taken over by smart algorithms, AI, and platform retailing solutions. Traditional ways of thinking are being replaced with more effective, data-driven merchandising processes that can react in real-time to actual demand. 

We are seeing a shift from a traditional approach according to which merchandisers try to guess how many items customers will buy to a more modern and data-driven approach. According to this new approach, retailers can track daily the consumer demand and optimally allocate the necessary items without over or understocking.

assortment planning

As the lines between online and physical shopping become less distinct, it is harder for omnichannel retailers to anticipate consumption from customers who expect the best of both worlds.

Predicting demand and allocating stock across different channels is a challenge for inventory management professionals, who must balance shifting shopper behavior against the eternal task of ensuring adequate visual display while keeping enough stock to cater for all potential sales between replenishment.

That being said, physical stores will continue to have a critical role in fashion sales. Especially once retailers have optimized the in-store experience using detailed local data that captures the consumer demands at the local level. For instance, a pop-up store armed with local data collection can play a huge role in developing a physical shopping experience.

Changes in consumer behavior and expectations have led to a big shift in the role of merchandising in fashion retail. A digital-first strategy is now a vital survival trait for any brand that intends on remaining relevant in a world where shopping will become increasingly digital. In this new world, retail spaces need to offer something special, and the digital and physical worlds are expected to dovetail perfectly.

The future of merchandising is one where we must respond rapidly to the market with the right product offerings in the right place at the right time.

Advances in smart technology and AI have already transformed many industries, and it is just getting started with fashion retail. Not all brands will see the importance of investing in this area – unfortunately, they are more likely to disappear. Those retailers that make the required investment will live to see AI transform their industry with better processes and a closer relationship with the consumer we serve.

departmental integration

Releasing 20,000 new designs each year and producing 75 pounds of textile waste per person, per year, will no longer be a viable business model. Instead, the fashion industry will need to adapt to new buyer sentiment and behavior by offering demand-driven and on-demand manufacturing.

To make money now and in the future, brands and retailers must produce what customers want – now, and in the future. Given that it’s impossible to predict demand, we shouldn’t devote resources towards that goal. Instead, the focus of operations needs to move toward an integrated approach that serves the real demand.

By cutting down lead-time to weeks, days, or even hours, it is possible to exactly match demand with production, by making items to order.

It requires a different process to the regular wholesale-to-retail supply model – instead, customers directly place an order for a design. The design is then made to order for them and then shipped directly to the customer or shipped to a retail location.

Consumers are much more focused on maximising the efficiency of their shopping trips and minimising the time spent in-store, and this means they will appreciate a more focused, customised shopping experience that features suggested products that are genuinely interesting to them. Retailers who can successfully blend their physical store with a customised digital experience will reap the rewards.

The rise of eCommerce as a dominant force in fashion retail means that traditional visual merchandising techniques need to adapt. Unlike a traditional physical store there is no opportunity to create captivating seasonal displays or window displays, nor is there the same opportunity to induce buying frenzies with carefully positioned bargain items and related products.

Products with special features, such as textures or sustainable credentials are even more challenging to highlight. When a shopper comes into an online store, there is no telling which direction they are coming from or which products they see first. This makes it impossible to lead them on a journey in the same way as you would with the layout of a physical store, so retailers have to approach this differently.

The online medium has many benefits and features which a physical store does not – making it possible to accomplish entirely new (digital) visual merchandising displays.

In the fashion industry, business intelligence has particular value because it can overcome the problem of uncertainty. Predictive analytics and data-driven insights can translate into perfectly coordinated actions that ensure each part of the supply chain is working in concert towards the ultimate goal: serving the customer and maximising throughput. Many uncertainty-prone decisions can be demystified and fully automated using the right BI tool.

Improvement of operations is one of the first areas of a retail business to see the demonstrable benefits of data-driven decisions. With an organisation-wide Business Intelligence system that senses and modulates each part of the supply chain, the throughput of the chain is maximised and the increased effectiveness will naturally result in better margins. Tools for accomplishing this are readily available, can make use of existing retail data, and deliver immediate results.

As consumer sentiment (and buying behavior) now shifts more quickly than ever before, it has become practically impossible for fashion retailers to produce a meaningful demand forecast.

 The solution to this problem is already here – in fact, it is right under our noses: data.

Retail businesses routinely collect vast amounts of data as a part of their regular sales processes, and there is much more available for collection and analysis if the strategy is in place to handle it. If you don’t collect much data aside from sales figures, it is also possible to buy data and insights in a thriving market of data and analytics tools.

Data is worth serious money if you can wield it effectively. Used properly, data can focus your efforts – like a laser – on the exact points where they will have the most impact. Using a rationally designed analytical process, raw data is turned into something meaningful – like an understanding of the relationship between real demand and external factors. These influences might include uncontrollable factors, like the seasons, weather, or sporting events; or they may be factors that you control, such as promotions or special sales events.

By harnessing the insights from your available data, it is possible to make better decisions that manage the supply process more effectively and reduce the reliance on faulty forecasting.

What makes the whole enterprise customer-centric is the ability to match our systems and processes to the customer’s needs. Much of this can be achieved with coordination of operational activities; replenishing stock frequently enough that we can match actual consumption. But all activities need to align to meet this objective. When departments do not align themselves to this goal, they fall short of meeting the needs of the customer.

Perfect coordination across departmental functions is needed to ensure the right decisions are made at the operational, tactical, and strategic levels – ensuring that replenishment, assortment, and planning are all focused on the same goal. Transparent data flows and new KPIs that reinforce the company-wide strategic vision is essential part to achieving this.

Achieving the right mix of products helps to drive sales by ensuring that margin-boosting ‘companion’ products are never out of stock and that the customers are inspired and motivated to buy. Having a wide assortment does not always drive more sales – indeed it is often the case that merchants can increase sales by eliminating some SKUs.

With the right combination of productsthe retailer can generate sales synergies and gain efficiencies by reducing inventory movement and markdowns. The key to success is to respond accurately to the customer demand – but this is not easily achieved when planning assortments many months in advance. Data can help to build insights about customer demand, and this, in turn, informs the product mix. With the right technological tools, it is much easier to handle complex data to inform better decisions.

The assortment planning process is an essential tactic for optimising sales, but it needs to be done differently when using digital tools – because retailers can achieve more precision using data that is updated in real-time.

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