Forecasting has never been easy, but multichannel and international expansion make it harder yet.
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- For international brands and retailers, deadlines are tight, so efficiency is a must
- A bestseller is a bestseller across markets – they have global appeal – and the UK often leads in trends
- The skillset required for merchandising is different in the digital world, and creative ability is needed
Multichannel and internationalisation are transforming all areas of retail, particularly planning. For the merchandiser, deadlines are getting tighter, customer touchpoints are more widely available and skillsets are changing, those attending Drapers’ Future Planning roundtable agreed.
The event, held in association with merchandising software specialists Island Pacific, brought together merchandisers from retailers including Ted Baker, F&F, Jigsaw, Dune and AllSaints.
Online has also transformed merchandising. Just a few years ago, ecommerce was a small part of a merchandiser’s role. Now there are dedicated planning teams for online.
“It’s a bigger touchpoint for the customer than bricks-and-mortar locations,” says Simon Short, head of retail merchandising for global outlets at AllSaints.
However, merchandising online requires a different skillset, Katie Cottham, merchandising manager at flash Sale website SecretSales, believes: “Online merchandising needs to have social and visual merchandising skills. [Nowadays] we have a bigger influence over how the store looks,” she says.
The way products are traded online can influence store merchandising and can be a valuable testing ground, suggests Sandeep Dulai, head of merchandising at Ted Baker. It stocks online exclusives, and their success can provide insight into what type of product is working and whether parts of the range should be sent to store early.
Short says that merchandisers should be working with digital teams to understand how customers are shopping online, what they are searching for and where they visit. AllSaints is now a digital-led company, he says. However, all too often retailers work in silos when they should be sharing information and insight across channels.
All attendees have rapidly growing international arms, which can have a big impact on the critical path and delivery schedule of stock.
“The deadline is not when we need to get it into store any more: it’s when our partners need samples,” says Mel Burrows, head of buying and merchandising at shirtmaker Thomas Pink, which has stores in Mexico, Dubai, Hong Kong, China and other markets.
“That’s the deadline we work back from and it’s desperately tight.”
It is a similar story at Jigsaw, says head of merchandising John Cossey. The impact is more dramatic in its Middle East business, where Jigsaw’s franchise partner selects its own edit of the retailer’s wider collection, he says.
However, bestsellers tend to have global appeal. “If something works, it works globally, even leather coats in warm countries like Australia,” says Cossey.
Lucy Peacock, F&F’s head of merchandising for women, agrees. However, she says trend-led fashion tends to emerge in the UK first, with its central European business lagging six months behind.
This lag, along with changes in climate, can be a useful tool for merchandisers. Australia, for example, which is seasonally six months behind the UK, is a great model for Jigsaw, says Cossey: “We buy minimum open stock and we can get rid of our terminal stock there,” he admits. “We also learn the lessons from the season and can apply it there.”
Unique trends can emerge in different markets, says Peacock, but there is a danger of being too market-specific and holding too many options. Merchandisers must balance the desire to boost sales with trend-led stock against putting together a tight collection that stays true to their brand, she warns.
Investing in planning tools
Online, international and the need for newness may have added more complexity to the planning process; however, there has not been a major investment in systems to help merchandisers cope.
Most attendees still use Excel spreadsheets for planning, but some fear it is no longer fit for purpose. Judith McCandless, senior account executive at Island Pacific, says that many retailers have stayed with a “creaking Excel system” because it is difficult to get some merchandisers to break the habit of using the tool.
Justin Burzynski, men’s product and supply chain director for footwear retailer Dune, has introduced Island Pacific SmartPlanning: “We hit a point when our spreadsheets were struggling to cope with the complexities we were engineering into them. It’s more robust now. It used to fall over constantly, and every now and then you’d find an error in a spreadsheet, which is quite traumatic.”
Others are keen to adopt a planning system but find it difficult to win boardroom backing for the investment: “It’s a big outlay to start off with and it’s difficult to explain the return on investment, as the benefits are homogenised into overall performance,” says Lucy Maitland-Walker, merchandise director of Dutch fashion and wholesale group Cool Investments, which owns brands such as MS Mode and Cool Cat. She is eager to introduce merchandising systems.
Bringing constant newness into store is another growing challenge for all merchandisers. Thomas Pink, which buys only twice a year, phases its range into regular drops and introduces capsule collections into stores to keep consumers interested.
However, the challenge is greater in fast fashion. F&F’s Peacock says: “Customers are going into our shops for their bread and milk more than ever before, and they expect to see new product.”
Peacock and fellow fast-fashion player Maitland-Walker say they meet every week to go over sales figures and decide what they need to buy more of.
New stock can be ordered and in store within six to eight weeks. Both F&F and Cool Investments have opted to manufacture in Turkey, which is closer to home, to ensure swifter delivery.
Maitland-Walker says this costs more but leads to more sales: “You tend to make the right [stock] decision, as you have more information. But if you do get it wrong, it can be very expensive,” she warns.
She believes merchandisers in the fast-fashion space would benefit from real-time sales data: “We need the right information to act quickly and for that we need IT support. We need to be able to check daily what has worked. Planning has to work alongside your IT road map,” she says.
Weathering the changes
Inconsistent weather patterns are also adding more complexity to the role of the merchandiser. Over the past year, the UK has had the mildest December on record, followed by snow in late April.
Retailers across the high street have struggled to sell seasonal stock, and Next, H&M, Primark and others have blamed the weather for poor sales in the past year.
Many retailers are introducing more transitional stock and moving away from set seasons. Maitland-Walker says clever retailers are beginning to build their ranges around stories, such as festivals, rather than seasons.
Short says getting weather-appropriate stock into stores is becoming trickier, and can be costly for retailers: “The cost of having short-sleeved or long-sleeved tops in store can be millions of pounds in revenue,” he says.
The retailers represented around the table carry out weather analysis to help with planning. However, they all agree it is difficult to forecast.
“It’s changing dramatically year on year,” says Burzynski. “You can also have a dramatic difference within the UK. The weather in London and Glasgow can be very different.”
Island Pacific marketing and customer relationship manager Nicola Ridgeway points out that retailers are introducing more “seasonless” product: “You see ankle boots in store all year round now. There’s a core collection that retailers are making sure is stocked throughout the year,” she says.
Burrows believes phasing its range can help Thomas Pink to navigate weather headaches: “We’re fortunate enough to have warehouse capacity, so we don’t have to bring stuff out straight away. We can hold stock for a little bit.”
However, retailers with larger volumes and less warehouse space may not have that luxury. Retailers across the table agree that the weather is likely to remain a headache.
Challenging times continue
The consensus around the table is that forecasting and merchandising are not going to get any easier. International and multichannel will become increasingly important and more complex, and pricing will become a bigger headache for retailers, all agree.
Short says there is a danger that fashion will become entirely promotionally led, because of the amount of discounting across the market.
Cossey agrees: “Once you go down the discounting route, there’s no coming back.”
Making sure the right stock is in the right place will be more critical than ever to avoid falling into this trap. The merchandiser will be on the front line, battling to boost full-price sales and to protect brand perception for the foreseeable future.