In the current retail marketplace it is very difficult for retailers to take into consideration the changing consumer demands without developing a collaborative relationship with consumers. The velocity of change in the market is too great to risk a costly mistake in product procurement and there is no leeway to adjust and overcome a procurement mistake. Since we have entered into this current retail market cycle of consumer control the product planning and forecasting along with the cycles of replenishment have accelerated in a dramatic manner and to top it off, the increase in competition, especially in the eCommerce channel, reduces the chances to recover even more. Consumers though are open to engagement and interaction, if the retailer would only engage in a collaborative relationship, to provide their insight and guidance on products.
Planning and forecasting in the current market cycle requires shorter cycles and increased information to increase the accuracy and timeliness of replenishment cycles. These cycles are also moving to a more immediate execution of replenishment in shorter cycles to allow the retailer to adjust to consumer demands and more importantly to adjust to consumer reactions to products. This requires a great deal of compiled information regarding consumer shopping and purchasing along with the direct consumer input and collaboration so the retailer can better understand the product and replenishment needs. This information regarding the product lifecycle also includes geographic product sales and shopping information that can allow the retailer to localize the sales and replenishment based on consumer demand. For instance summer in the south, or winter in the north last much longer and large retailers should extend product offerings based on the local climate conditions.
These new shopping inventory replenishment patterns require both a great deal of information and a flexible supply chain to support the seasonal and geographic fluctuations. This requires a great deal of planning and coordination to implement an inventory strategy that is flexible to support the needs across a disperse market and retail channels. It requires the planning and coordination to move inventory between regions and channels to support the consumer shopping and purchasing demands. All of this requires rather precise data on costs and benefits to support the demand requirements across regions and channels.
The glue holding all of this together though is the improved collaborative relationship between consumers and the retailer. The collaborative relationship provides retailers with the ability to quickly understand intent and direction of consumers so they can adjust their forecasts and planning models. The critical benefit of the collaborative relationship is the speed of understanding and reaction to changing demands. In this marketplace decision speed and accuracy makes the difference for adjusting to the consumer demands and increased sales. It does of course require a long term investment in technology and people to succeed in this new marketplace and retailers do not have a choice in this matter.
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?