Categories are constantly evolving. If not responded to quickly enough, there’s significant lost opportunity that is left on the table, unclaimed by the retailer. Hear why an agile merchandising approach is critical to achieving profitable, customer-relevant assortments from Symphony RetailAI’s Head of Category Planning Industry, Julian Miller.
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The biggest challenge we see from retailers is if we’re actually going to analyze the categories and make decisions about assortment, it’s bringing together all the different sources of data that are involved in those decisions.
So you know, we typically bring point of sale data, together with customer loyalty information, with planograms, with market data, to get a full picture of what’s going on. That kind of process is traditionally very slow. It’s not unusual to see a reset cycle time of 30 weeks from the initial category review to those products actually being available in store for the customer to purchase. What we find is, that by following this approach, there are a lot of missed opportunities there, out on the table. Categories are constantly evolving. And where we’re not responding quickly to those changes in the category, there’s a significant lost opportunity that is left on the table, unclaimed by the retailer.
So another challenge we see, is that retailers want to bring other services in-store. So it’s not just about the traditional sort of FMCG products that they’re selling, but it’s about making space in the store for those other services that they can offer. And what we find, when we look at the assortment, is that typically, most retailers in most categories, are over assorted. We often talk about the Rule of 17, which says that 17% of items in an assortment are duplicative in nature. And what this means, is actually, we can take those items out. We have to do it carefully, but if we do that carefully and we choose the right items to take out, we can make space available in these very constrained environments, to be able to bring those other services in-store or to target a smaller store space, such as a small convenience store in a city center location.
So the question is, is how can we solve these problems? How can we use sort of the technology of today, to help retailers, solve what have been very longstanding problems?
So one of the things we look very carefully at is the customer data. And through the customer data, we’re able to understand a number of different things. We’re able to understand which products are important to customers, but also when we delist a product, how the demand from those products will transfer or even if it will transfer within the category.
That enables us to rationalize the assortment in a much more sophisticated and scientific way than perhaps we’ve done in the past. We can also make these decisions very quickly in real-time and we are always using the most up-to-date customer data.
So moving away from the big category resets and towards a much more agile merchandising approach, where we’re looking at the categories on a sort of monthly or periodic basis, we’re finding that, you know, the changes are actually smaller. We’re not taking as many items out or putting as many items into the category, but they’re more effective. And because the changes are smaller, we’re not having to take out 30 or 40 items and replace those with new items. We’re making small, incremental changes. We’re closing the opportunity gap and we’re making a more efficient approach to realizing the opportunity that’s out there on the table.