The world has changed. And retail needs to change with it. The headlines might be crowded with stories of brands and retailers that responded well to immediate disruption of the pandemic – and especially those that didn’t – but many of the forces reshaping retail right now had deep roots before that crisis.
Well in advance of 2020, direct-to-consumer brands and retailers found themselves struggling to balance a huge volume and variety of variables and competing priorities when deciding what products to bring to market, and which SKUs to keep refreshed and replenished. Long before the first lockdowns, the same brand and retail organisations had seen tectonic shifts in the distribution of sales and engagement across different physical and digital channels. And although COVID flipped a switch to online-first for most retailers, a blend of own-brand sales and marketplace strategies had been steadily creating a multi-faceted, more complex selling environment for some time.
This was also all taking place at the same time as new expectations were being set for a consistent, cross-channel, consumer-first experience that had elevated the shopper – rather than the merchandiser – to the driving seat as the primary influencer of planning and buying, creating an atmosphere of unpredictability that predates the pandemic.
“The retail business model was turned on its head well before COVID exposed its weakest links, which means that the traditional approach to forecasting and planning – intuition-based, channel-focused and inflexible – has been out of lockstep with the realities of retail for far longer than many organisations realise,” says Gavin Fallon, General Manager for Board International.
An intelligent planning and decision-making platform, Board was, pre-COVID, quietly building up an imposing list of retail and brand customers in fashion – including Puma and H&M – before the pandemic threw the benefits of a new model of planning into even sharper relief
The Interline spoke to Gavin in advance of the tech company’s upcoming Board Day virtual event, during which British luxury leader Burberry will spotlight how it transformed both its merchandise planning approach and its enterprise data strategy with the help of Board’s smart decision-making platform. The live case study is free to attend, and is sure to be fascinating, but ahead of that testimonial, we partnered to discuss the core concept of intelligent planning, and to answer the question of why the current retail landscape demands nothing less.
“A successful retail strategy has always been defined by gaining every possible competitive advantage, across the full spectrum of potential channels, but the disruption of the last few years has made those advantages much harder to reach using traditional tools,” Gavin explains. “In a market that’s constantly defying people’s predictions, and where the backdrop of retail changes almost daily, the ability to plan based on accurate, timely data is key to being able to respond to new challenges and capture new opportunities. The closure of brick-and-mortar stores and the bottlenecks in global supply chains are extreme examples, but unpredictability is everywhere, all the time. Combine that with the pre-existing forces that were already transforming retail, and I believe the circumstances are right for an entirely new approach to planning.”
Redefining decision-making
What might the new planning look like? The key distinctions between it and the traditional approach are data volume, deadlines, and dimensionality.
Planning of all types – merchandise, assortment, financial and more – has, in the past, been oriented around one particular objective or channel, and based on analysis of historical information. Intelligent planning is the opposite: multi-dimensional, channel-agnostic, and operating in as close to real-time as possible.
Consider the data that might inform a traditional planning strategy: it would likely be built on analytics from prior seasons and retail KPIs, conformed to fit a merchandise plan that was calibrated based on approximate, averaged data on the retailer’s target demographic.
By contrast, an intelligent planning strategy might draw on the same historic sales performance, but also place comparable importance on footfall data, eCommerce behaviour patterns, material wastage, returns figures, product data housed in PLM and other systems, sourcing and supply chain indicators, and much more.
With many brands and retailers balancing a complex mix of channels across digital, physical, franchise and marketplace outlet, the shape of demand is constantly changing.
And it’s not just the scope of the data ingested that’s reshaping how the fashion and retail industry thinks about planning, but also the composition of the user base for planning solutions. Because of the complex, shifting nature of the retail market, more job functions than ever now need to have an input into the planning process, and more roles than ever can benefit from an approach to planning that provides them with more comprehensive situational awareness.
But as Gavin explains, surfacing the kind of insights that provide that awareness is outside the capabilities of legacy planning tools:
“There’s no question that having access to more granular, more timely information at the point at which decisions are being made can enrich the decision-making process, but only if that information is aggregated and turned into actionable insights in a way that actually feeds into the ongoing planning cycle. In practice, this means breaking down the barriers that exist in many brand and retail business today between analytics and planning, which we can achieve by unifying those processes in a single collaborative tool that empowers anyone to make an informed decision in the moment.”
The point at which that moment occurs is also changing. Where previously planning decisions were set in stone pre-season or pre-collection, choices now need to be made on a regular basis, demanding that brands and retailers have the capability to react in-season to changes in circumstances.
A simple example of this type of change might be an unexpectedly high demand for a particular colourway (perhaps shaped by a celebrity or TikTok trend) that leaves overstock in other colours, but a struggle for replenishment in one. A more complex example might be a shift in the regulatory landscape that alters the sustainability target for a particular product or across a retailer’s portfolio, and that requires a shift in either the assortment plan or the material sourcing strategy.
Whatever the cause, it’s more common than ever for merchandise plans, product specifications, channel allocations and a host of other variables to need to change on the fly.
“Retail plans have always been set with the best of intentions, based on the best information that merchandisers have available to them at the time, but targets, resources, and channels can change rapidly and retailers need to be able to react,” Gavin explains. “What seemed like the optimum financial plan a month ago might be completely up-ended by changes in raw material prices, fuel rates, shipping container costs, consumer trends, or a broad spectrum of other reasons. This extra layer of complexity, and this need for agility is why our customers – notably PANGAIA and Burberry – are making use of Board to bring real-time intelligence into their planning process on an ongoing basis, so that an opportunity to improve the product mix, or reduce the brand’s carbon footprint, is not missed.”
And the need to re-evaluate planning decisions does not end once a product is already in the market and SKUs are working their way through the distribution network. With many brands and retailers balancing a complex mix of channels across digital, physical, franchise and marketplace outlet, the shape of demand is constantly changing.
Being unable to properly sense and unify those multiple demand signals can easily result in stock not being where it needs to be. Conversely, having that capability is already allowing brands like Puma to track consumer behaviour across the full spectrum of channels, and to match their allocations in near-real-time to the constantly evolving nature of demand.
“With Board we have significantly increased the accuracy and speed of our forecasting, and are now in the position to continuously balance supply and demand” says a Director of Supply Chain for Puma in Europe.
For brands like Puma that invested in intelligent, integrated planning ahead of the pandemic, those capabilities helped to blunt some of the impact of the retail industry’s most significant disruption in decades. But for brands that did not have that structure in place pre-COVID, the same capabilities quickly became a core strategic objective, overtaking other technology initiatives, as Gavin explains:
“When the pandemic struck, brands began to, understandably, pull back from making technology investments. But intelligent planning remained a priority for those organisations that recognised how dramatically the retail landscape was changing, and who saw that the pre-pandemic forces that had already been driving the need for a fresh approach were only going to become more pronounced. The brands that had already made the transition were able to continue remotely with decision-making processes that had previously relied on in-person reconciliation, and even enhance those processes with entirely new insights. And the brands that hadn’t, rapidly realised just how important having a reactive, collaborative planning environment was going to be.”
The customer experience, along with key commercial and brand drivers like profitability and sustainability, is top of every retail CEO’s agenda today, and all of these have their roots in a new model of planning that combines intelligence and intuition.
And while the pandemic may have faded into the background, the importance of those capabilities is being underlined today, with the retail market sub-index on track for its worst week since March 2020. So while analysts have recently predicted that retail would mount a strong recovery in the second quarter of 2022, rising retailer costs and new levels of unpredictability in demand are currently dispelling that notion – leaving brand and retail organisations with the inescapable conclusion that objective intelligence, rather than pure intuition, will need to be the new cornerstone of their decision-making process.
Intelligence meets intuition.
Where might that objective intelligence come from? And where will it meet the intuition that the best merchandisers and planning teams have married with product knowledge to create the “art” of planning in the past?
The simplest answer is that one will support and enhance the other.
Historically, planning has operated effectively as an isolated discipline that did not need to draw too heavily on significant volumes of external data, and has had the luxury of more time to forecast and execute to relatively static targets. This made it manageable at human level.
Today all of those components have changed. Retail planning in 2022 demands that huge volumes (and huge variety) of data need to be taken into account in order for a decision to be taken based on accurate information. And the sheer amount of that data is simply more than a human, or even a team of humans, can analyse, interpret and act on – especially within the shrinking timeframes that retail planning teams are now given to act.
This is where intelligent planning – like the engine at the heart of Board – becomes essential as a tool for augmenting and supporting human creativity and decision-making. It remains clear that experts in merchandising, planning, and buying have a unique blend of product and commercial knowledge that has allowed them to calibrate winning market strategies. But as the outward world changes, those teams require new foundations upon which to base their decisions – which is precisely what the interactive dashboards, impactful reports, and other insight that a road-tested machine learning model can provide.
And, critically, those objective insights can also be incredibly valuable to product creation teams as well as planning departments. These functions are often treated separately, but intelligence has the potential to bring them together in a way that steers not only the planning process, but the ongoing cycle of design and development.
“The rising cost of sampling and shipping, and the sustainability and cost impacts of returns, mean that it’s more vital than ever for brands and retailers to have the utmost confidence in the products they’re bringing to market,” Gavin adds. “In our experience, intelligence has a huge role to play here, allowing organisations to not just react to where stock needs to be allocated, but to actually influence what they’re creating in the first place. Data does not need to dominate the decision-making process, but across a huge segment of the product lifecycle it can provide transformative insights that lead directly to the right products reaching shelves and eCommerce catalogues at the right time.”
Hear more from Burberry at Board Day 2022
One brand that has built an unimpeachable heritage from having precisely that combination of the best possible product in the best possible place is British luxury institution Burberry.
Over the course of the pandemic and beyond, Burberry has been spearheading a comprehensive transformation strategy, as part of which the brand implemented Board’s smart retail planning platform. On the 8th June, at 10:00 BST, Burberry’s VP of IT, Product and Supply Chain, Melanie Stocker, will be telling the story of this project as part of Board Day 2022.
This client-led case study presentation will provide insights into the evolution of merchandise planning in a creatively led organisation, the importance of business data governance and building a data-led strategy, and why partnership working is essential in any technology-driven transformation project.
“Burberry exemplify intelligent planning – making use of the insights and collaboration tools provided by Board to deliver an uncompromising customer and brand experience, everywhere from assortment planning to inventory allocation and replenishment,” Gavin concludes. “That customer experience, along with key commercial and brand drivers like profitability and sustainability, are top of every retail CEO’s agenda today, and all of these have their roots in a new model of planning that combines intelligence and intuition. That’s a vision that Board has been striving towards for some time, and we’re thrilled to have one of the biggest names in luxury leading the way.”
About our partner: Board is the #1 decision-making platform. Founded in 1994, Board enables people to have a transformative impact on their business, helping them to intuitively explore and leverage their data in a flexible, all-in-one decision-making platform. By unifying Business Intelligence, planning, and predictive analytics, the Board platform allows companies to produce a single, accurate, and complete view of business information, gain actionable insights, and achieve full control of performance across the entire organization.
