Confessions of a sales addict

Merchandise planning tools don’t sound too sexy, but with contemporary automation, the art and science of planning come together. Kate McDonald takes a look at what merchandise planners can achieve now and in the future.

It’s not exactly a trade secret, but everyone knows fashion and footwear retailers are addicted to sales. Sales in terms of clearances at the end of the season, and sales in terms of making the most of the stock in the shop.

Even the most apparently successful of retailers can fall prey to a lack of understanding of how to plan their purchases. They either end up with too much stock or too little: the end result of the former is profit lost through mark-downs, and the latter is profit lost through missed sales.

How to go about minimising both is the job of automation, particularly automatic planning tools, according to Brett Ashcroft, managing director of Futura Retail Solutions, which is exhibiting as part of the 2020 – Shop of the Future concept store at Retail Expo in Melbourne in August. While it’s not exactly rocket science with today’s tools, there is an art to the job of merchandise planning and control that automation is there to assist with, Ashcroft says.

“If you have 100 stores up the east coast of Australia, there is going to be a vast difference in performance between far north Queensland and suburban Melbourne, based on climate. That’s obvious, but there are idiosyncrasies like the fact that Chatswood in Sydney will sell much more smaller sizes.

“These should be allowed for automatically. That’s what a good system is doing – understanding the nuances between the product and the nuances of the branches and thus automating the process of optimal stock levels per location per period of time.”

What is rocket science, however, is the ability of contemporary and future technology to dynamically adjust an individual store’s optimal stock per product, he says. “The 2020 vision – or the vision of the future – is to allow proven technology to automate as much of the day-to-day decisions as possible. Technically, we can do it today, but what we are doing is adding the sex appeal with other tools, and that’s what the market wants.”

These tools, which Futura is launching at Retail Expo, include a range and assortment planning tool and a highly graphical reporting tool. “With modern technology, particularly in the last five years, it is the speed of the processing power that has allowed a range of reporting tools to be available to the market,” he says.

“Futura has aligned ourselves with a specific product internationally, called Analyser. Analyser has sex appeal galore.”

Sex appeal aside, if you are going to invest tens or hundreds of thousands of dollars in an enterprise-level system to manage your merchandise, you might as make sure it is one that uses data correctly to plan the future.

“The dilemma for retailers is that they are all an addict of sales,” Ashcroft says. “The double-edged sword is that if they do not have enough stock, they miss out on sales, but if they finish the season with too much stock, then they have mark-downs. So on December 20th, if you have key items in your range that are missing, you may have missed out on hundreds of thousands of dollars worth of sales. If you have too much, then you are giving away hundreds of thousands of dollars in mark-downs.

“With these planning tools, what we are able to do is make it easy to understand the trend and allow the merchant to map that trend into the control process, both from a buying perspective as well as an allocation perspective.”