Inventory optimization is the key objective of the combination of forecasting and planning and the social commerce marketplace has dramatically changed both the priority and the practice of these activities. The key change that must be incorporated is the velocity of changing demand and the impact on the forecasting window that is manifested with the new social commerce demands. Social commerce has dramatically changed the retail marketplace and there are many factors driving these changes especially the impact of the fast fashion and the speed of changing demands across the marketplace driven by the expansion of eCommerce shopping and sales. The changing demands of the marketplace must be incorporated just as quickly in the demand forecasting and planning models of retailers.
Fast forward retailers have especially impacted the retail marketplace with their changes in the velocity of product change. This has in reality coincided with the consumer demand changes in the retail marketplace and the fast forward retailers success has been related to their forecasting and demand planning practices, especially their increased change cycles of demand planning. This is a practice that is important to all retailers in order to maintain their success. The velocity of demand change is different in some market segments than others, for instance I don’t think the home appliance market changes at the same rate as the mobile phone market for instance. I don’t know if the fast forward apparel retailer recognized the change and revised their forecasting and demand planning practices but I do think that they recognized that consumers were changing their shopping and purchasing methods and practices and they are trying to meet these new consumer demands.
The key consumer change that is making the largest impact in forecasting and planning is the change in shopping and purchasing practices that has been brought about by the combination of eCommerce and the increase in millennial consumers in the marketplace. The cycle velocity of shopping and purchasing has been changing over the last 10 years and the increase in millennial consumers has finally pushed the practices to the tipping point where the changes to the marketplace is driving dramatic changes across the retailers. I think we are seeing changes in the marketplace now driven by the retailer inability to forecast and plan at the velocity that is demanded by consumers as a result of their changing lifestyles.
Unfortunately for the large legacy retailers the marketplace changes require a large investment of money and resource focus and skills in order to react appropriately to the changing consumer demands. Retailers that are impacted the most are the legacy department store and large chain retailers that have a heavy investment in brick and mortar real estate. The marketplace though will not allow retailers to delay or ignore these changes in forecasting and demand requirements and retailers must invest or die.
And now for the audience participation portion of the show…
ECommerce will have wide ranging impacts on both the retail and manufacturing sectors. How can you focus these abilities to improve the consumer's experience? Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes. In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas. How can you support these continuously changing requirements?