Dive Brief:
- Retailers must be highly adaptive to consumer trends as they plan their merchandise — a difficult task, but essential to avoiding stockouts and boosting return on investments (ROI), according to a new article from Infiniti Research.
- Retailers should consider four trends: Demand for new, better, personalized products; innovations and improvements; value for money; and customer feedback in product development, according to Infiniti.
- Challenges facing the retail industry — including technological advancements, demand for in-store experiences, siloed customer data and shoppers' access to digital research — make it harder for retailers to plan merchandise but even more necessary, Infiniti said.
Dive Insight:
In an ever-more-digital age, retailers face heightened and fast-changing consumer demands for quicker access, better prices and cooler in-store shopping experiences. Purchasing merchandise ahead of time, then, requires careful planning and insight to avoid taking a loss on inventory.
"For companies in the retail industry, who cater to a highly dynamic target audience, forecasting the demand and market trends could prove to be a tricky task," the Infiniti article noted. "Most companies in the retail industry face stock-out or over-stocking situations due to the lack of an appropriate merchandise planning process."
With vast amounts of information at their fingertips, customers can compare prices and become aware of new alternatives, meaning retailers must anticipate consumer desires as they order merchandise.
It's not a total shot in the dark for retailers, though: "While undertaking merchandise planning, retailers need to be able to derive meaningful insights from product development and sales trend data to determine the product lifecycle and help buyers define a calendar for improvised and innovative launches," Infiniti said. Retailers should also "have an intimate knowledge of the price points and promotions that have shown favorable results in the past."
Besides analyzing trends, engaging customers on social media platforms to gauge interests in products may provide retailers with additional insights. Some retailers are already doing that. Target, for example, recently launched a project connecting designers and customers with an app and millennial-focused companies like Outdoor Voices have based much of their customer interaction on social platforms.
"Most businesses today have realized the potential of social media by giving them leads, this is one of the main reasons why they are gradually taking measures to establish their online presence," Infiniti said. "Through these online platforms, retail industry companies are gathering valuable feedback from customers on how the product can be improvised."
Furthermore, retailers can differentiate their general merchandise by location, along with other factors, to make it more appealing to their customers. And in-store merchandise arrangements matter, too, as customers seek better shopping experiences.
Infiniti also references "savvy shoppers," customers who spend more time researching products and considering the whole shopping experience before choosing where to shop. Savvy retailers will have to match those demands with their own research and attention to their customers' shopping experiences.