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Buckle up. Here's how to bring speed & accuracy to retail decision-making.

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The days of private runway shows with top-secret designs leading to months of waiting for the next biggest trend are all but over. Instead, retailers are under immense pressure to move faster across all areas of the merchandise, planning, and allocation process - with speed ultimately driving success.

It’s time to tap into your data to uncover methods for introducing a whole new level of speed to your MP&A process.

Celect and AlixPartners dive into a discussion covering:

- Importance of a data-driven plan and open to buy to drive speed
- Why product attribute information can inform and give confidence
- Examples of how retailers accelerated their processes
- How to optimize your inventory with advanced analytics

Published in: Retail
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Buckle up. Here's how to bring speed & accuracy to retail decision-making.

  1. 1. Buckle Up. Here’s how to bring speed & accuracy to retail decision-making
  2. 2. Welcome! ©2018Celect, Inc. All Rights Reserved.2 Shawn Ashworth Managing Director Todd Harris Director of Marketing Luca Signorelli Vice President
  3. 3. Today’s themes 1. AI and Predictive are having the biggest impact on speed 2. Data-driven decisions help accelerate the merchandising process and are most profitable 3. Speed requires accuracy ©2018Celect, Inc. All Rights Reserved.3
  4. 4. Celect Background • Predictive Analytics SaaS platform to help retailers optimize inventories through data-driven decisions. • We leverage a groundbreaking advances in Machine Learning and Optimization. • Top 50 Technology Innovation out of MIT Artificial Intelligence Lab ©2018Celect, Inc. All Rights Reserved.4
  5. 5. Gartner expects that, by 2020, retailers will be utilizing AI to make better and faster decisions. Advanced analytics and smart data discovery will lay the groundwork for AI to revolutionize the accuracy and speed of retail decision making. - Gartner, Inc. ©2018Celect, Inc. All Rights Reserved.5 Source: RobertHetu. Gartner,Inc. Will PeopleorMachinesRuleAlgorithmicRetailing?December2017.
  6. 6. Interest in Artificial Intelligence is Growing in Retail ©2018Celect, Inc. All Rights Reserved.6
  7. 7. 7 DATA OVERLOAD Inventory, POS, Browse History, Transaction Logs, Search, etc. BLURRED PHYSICAL & DIGITAL The Shift from Silos to Integrated… Harder than You ThinkAREA OF OPPORTUNITY Optimization & Speed Across: Assortment Planning | Buy Accuracy | Store Allocation | Fulfillment What can get in the way? ©2018Celect, Inc. All Rights Reserved.
  8. 8. Our approach in retail is unique because we focus on value creation driven by analytical insights Faster, deeper, and more sustainable results Retail Analytics Platform • Extensive toolkit of proprietary retail insight tools • Formalized data analytics across 14 modules that span the entire retail landscape • Hypothesis driven and value creation focused • Delivers fact-based insights within days, not weeks Experienced, senior staff • Over 100 senior leaders with deep retail experience across channels • Core team with global expertise across the retail value chain • Deep network of Subject Matter Experts (SMEs) • Experience and learnings from hundreds of retail industry situations Proven implementation • Extremely collaborative with client teams • Problem solvers who address and clear roadblocks • Action, results oriented • Focused on achieving fast, yet sustainable results Tailored, comprehensive approach • Appreciation of dependencies across the retail value chain • Experience level that appreciates how different each situation is • Multiple battle tested approaches • Flexibility to tailor to client needs while focused on tangible results
  9. 9. Retailers are changing their product development processes to move faster in a highly competitive environment Old Slower, seasonal, gut-driven New Faster, season-less, data-driven Seasonal calendar of 34-51 weeks Fast track: 14-28 weeks Core product calendars spanning 20-50 weeks Season-less 5-20 week calendars Today’s winners are: • Using data and insights to speed up the development cycle • Shifting greater portion of assortment toward season-less mindset • Realizing greater margins than their slower competitors But it is not just development cycles. Buying and merchant processes need to keep up, infusing data and insights to better manage inventory in-season.
  10. 10. Several key inputs should be considered to drive an effective merchandise strategy • What products won and lost? Why? • What was overall assortment productivity (breadth/depth/GMROI)? • What is the optimal mix of trend/seasonal/core and price point? • What should we tailor assortments by store to maximize productivity? • What are consumer expectations for price, assortment/trend, quality, etc.)? • How do our customers and non- customers rate us on the above? • What other macro-factors will impact consumer behavior by category? • Who are our competitors? • What differentiates us? • What is our market share and trend? • What competitor entrances and exits do we expect by market? C o n su m e r R e se a rch C o m p e titiv e D y n a m ics T re n d H in d sig h t Merchandise Strategy • Assortment architecture • Financial targets • Door strategies • Promo strategies • Are our category strategies aligned to current trends? What should we tweak? • What new material trends should we incorporate? • What are the new color trends? • What new manufacturing trends exist? All questions should be assessed by category
  11. 11. We use a variety of tools to increase the speed and sophistication of critical hindsight elements (1/2) • Compares gross margin return on investment (GMROI) versus investment across categories • Where are category inventory investments misaligned with returns? • Assortment choice level comparison of sales volume and GM rate • Which low performing choices should be rationalized vs. re-invested in? • Performance comparisons by attribute groupings (e.g. price, fabrication, color, etc.) • Which attributes are resonating with our customers? GMROI analysis Choice level comparisons Attribute analysis
  12. 12. We use a variety of tools to increase the speed and sophistication of critical hindsight elements (2/2) • See changes in breadth and depth per style/color as store volume changes • What is the target amount of choices and style/color depth to maximize margin dollars? • Standardized buy calc approach grounded in historical results by product rank and store group • How much to buy in total and by size and how to pack? • Determines what promotions are the best and worst over time • What types of promotions should we run more or less of to maximize margin dollars? Breadth / depth by store group Buy depth analysis Promotion effectiveness
  13. 13. Timely and accurate assortment architecture guidelines are critical for developing a product development execution plan Assortment architecture… …informs development calendars… …which dictates ideal vendors The “What” Product type and pricing level Core Fast track The “How” Product development calendar types by approximate duration The “Who” Partnership models available to each calendar type Seasonal Total buy and seasonal product flowstrategy Co-creation In-house Partner Designed Partner Managed Most control Least control BestBetterGood Core Seasonal Trend NOTE: attributes vary by retailer Innovation Track Process is only half the equation. Incorporating data-driven insights increases execution effectiveness exponentially.
  14. 14. ©2018Celect, Inc. All Rights Reserved.14 Speed & Accuracy Through Predictive Analytics
  15. 15. ©2018Celect, Inc. All Rights Reserved.15
  16. 16. Plan Optimization for High Fashion Department Store $4.5M 111%in incremental store revenue full price sell-through increase
  17. 17. Buy Optimization for Multinational Specialty Retailer 77% 40% full price sell-through (increased from 46%) reduced inventory investment
  18. 18. KEY TAKEAWAYS: 1. Prioritize what drives value 2. Predictive analytics enables better decisions 3. Speed is a requirement to compete, but impossible if you aren’t using your data ©2018Celect, Inc. All Rights Reserved.18
  19. 19. ©2018Celect, Inc. All Rights Reserved.19 THANK YOU Contact: todd@celect.com sashworth@alixpartners.com More: celect.com/demo alixpartners.com/ Twitter: @celect @AlixPartnersLLP

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