All posts by Marilyn Bernardo

The Planning & Forecasting Fix that Fashion Retailers Need to Increase Profit Margin

Nothing repeatedly challenges retailers and erodes margins as the misalignment of inventories with consumer demand.  For clothing, footwear, and accessories retailers this misalignment often leads to lost sales due to out-of-stocks or higher markdowns when they have overestimated demand.

Obviously, a retailer’s revenue and profit take a hit when an item is not available when a customer wants it.  And today, with shoppers quickly pulling out their cell phones to seek alternatives, retailers are at greater risk than ever of losing the current sale – and potentially all future ones –while negatively impacting the customer experience and their brand.

On the other hand, heading off lost sales with heavier inventories comes with huge costs as well. A survey conducted by Coresight Research and Celect estimated that non-grocery retailers in the U.S. absorb markdown costs of about $300 billion annually, or about 12% of overall sales.

This research report found that “misjudged inventory decisions—including overbuying, buying the wrong type of products and misallocating inventory—account for an estimated  53% of unplanned markdown costs for retailers”. Diving deeper, the research identified that the largest factor leading to unplanned markdowns was “reduced demand due to external factors such as unseasonable weather, sudden changes in consumer behavior and competitors’ unplanned promotional activities”

Factor in External Demand Drivers to Optimize Inventories

Traffic levels (store and online) and the sales of particular products in specific locations vary significantly from day-to-day and week-to-week throughout the season and no other external variable influences these demand shifts as consistently, meaningfully, and directly as the weather.

Too many retailers ignore the impact of weather and this adds error to plans and demand forecasts. Planalytics predictive demand analytics give companies the visibility they need to proactively adjust allocation and replenishment decisions based on when, where, and how much changes in the weather will influence purchasing.

Businesses use Planalytics’ product-specific, localized demand adjustments within their SAP environments to improve accuracy for core retail activities.  As Planalytics’ preferred SAP systems integrator, Groupsoft provides seamless integration into SAP applications. This includes SAP’s Customer Activity Repository (CAR), where retailers can get a clear read on their performance by having a true understanding of the weather’s impact on sales. In addition, these weather-driven demand analytics can feed into SAP’s forecasting system (F&R / UDF) as well as Merchandise Planning, Allocation, Replenishment, Pricing, Promotions, the SAP Analytics Cloud, and more. Once integrated into SAP, these scalable and sustainable analytics drive measurable benefits across the business.

What We Deliver

As Planalytics’ exclusive SAP systems integrator, Groupsoft offers implementation and consulting services for operationalizing Weather-Driven Demand (WDD) analytics

Groupsoft specialises in Industry Solutions for Fashion, Retail and Wholesale Verticals.

 

 

 

 

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Retail Sales Impacts & Outlook for Spring 2022

Join UBS and Planalytics for a look at key factors expected to influence retail sales performance during the spring season.

Topics include:

  • A discussion of the current business environment and the macroeconomic factors (inflation, interest rates, etc.) on consumer demand
  • High-level review of year-to-date opportunities and challenges confronting specific retail segments
  • An outlook on how weather-driven demand is expected to affect comp sales performance across regions/markets and key seasonal product

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Global Retailing Ideas Summit

As a Corporate Advisory Board member of The Terry J. Lundgren Center for Retailing, Planalytics is excited to participate in the Global Retailing Ideas Summit,  from Wednesday, April 27, 2022 – Friday, April 29, 2022, at the Campus of University of Arizona in Tucson, AZ.

If you are interested in learning more or arranging a time for a meeting during the Summit, please contact rquinn@planalytics.com.

View additional event info here. 

 

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Recovering from the Disrupted Supply Chain

Almost every retailer has felt the impact of slowdown in the global supply chain resulting in lack of inventory where the demand is. They face this unplanned reality at a time when consumption patterns and preferences have rapidly changed as demand gets increasingly digital. These turbulent times, along with the role of weather, have changed the way retailers do forecasting and planning for their supply chains, inventory allocation and replenishment.

 

The State of Supply Chain

Supply Chains are having a moment. With the threat of the pandemic still looming large and a number of economies still under lockdown, the disruption of the supply-chain is almost absolute, and at a global scale. As businesses open, supply chains are facing new realities besides creating a safer way to service the customers – Cost escalation. Be it the higher costs of containers, shipping, hauling, and storage that has led to higher raw material prices or the opportunity cost due to tremendous delays in deliveries due to weather uncertainties. 

Impact on Retail

Retailers while facing challenges of their own are mirroring the woes of their Supply Chains that have traditionally been their competitive differentiators. According to a report by Advanced Supply Chain Group (ASCG), 66% of retailers in the US, experienced delays in stock deliveries and 63% reported problems with availability in 2021.

The report revealed that the pandemic had forced 82% of executives at top retailers to change their stock management practices, and 40% invested in improvements to their inventory management accuracy. The swings in demand and product availability have made planning the centerpiece of operations and with limited capabilities, it might become an awkward juggling act for quite a few. Add to that the complexity that weather brings in, not just to consumption changes but more so by impacting the supply lines due to disrupted productions, customer experience with fulfillment issues and increasing the costs that eventually hurts the retail revenues and margins. In the global supply chain, changes to climate patterns and more extreme weather events are forcing adaptations to production practices and technologies, causing adjustments to sourcing arrangements, and threatening the longer-term security of supply of key commodities. A consumption delta change by a few basis points can lead to increase in out of stock or over-stock inventory levels. 

Weather is an important parameter to monitor and measure in the entire buying, allocation and sourcing functions within the supply chain. It is imperative for retailers to learn, adapt and equip themselves to manage these uncertainties, as we embrace ourselves for the long haul, battling the impact of climate change.

How to respond to the Challenge

With margins under pressure with a shift from in-store to online sales, apart from the relentlessly rising shipping costs, retailers are left with no choice but to strengthen their digital portfolios. The focus of new investments in technology has to be in newer modes of customer engagement and service to strengthen the future, but it’s the optimum utilization of current resources that is of paramount importance to secure them today- Forecasting & Planning. 

Retailers and brands face a daunting multitude of short-term challenges around health and safety, supply chain, labor force, cash flow, consumer demand and marketing. Yet, successfully navigating through these challenges is not enough; what is needed is for retailers to prepare for the future and invest in functions that would help them achieve that – People, Plan, Partner

The top priorities of the retailers should be the following:

Retailers have an opportunity to use this challenge to redefine their relationships, reposition themselves in the minds of their customers and create an operating model that’s intelligent to forecast demand, accommodates the impact of weather in planning & placement and is resilient & responsive enough to fulfill that.

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Great Expectations: Holiday Shopping Summary and Upcoming Trends featuring NRF’s Katherine Cullen

Join Planalytics and NRF for a summary on holiday shopping and upcoming trends featuring NRF’s Katherine Cullen.

Topics include:

  • NRF sales forecast for November/December
  • Shopper Trends throughout the holiday season
  • Post-holiday shopping plans, including when people planned to make returns
  • Weather impacts over the holiday shopping season
  • How weather will influence consumer purchasing in January
  • NRF Big Show Preview

Register Now

 

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Mixed signals as Target, Walmart and other retailers brace for last-minute holiday rush

By Melissa Repko 

With Christmas fast-approaching, retailers are gearing up for a last-minute rush of shoppers.

Stores and retail websites are expected to draw more than 148 million shoppers on Saturday, according to an annual survey by the National Retail Federation and Prosper Insights & Analytics. That’s a slight drop from the final Saturday before Christmas last year, a day known as Super Saturday in the industry. Last year, 150 million consumers were expected to turn out, which was higher than the estimated 147 million shoppers in 2019.

This year, however, that final sprint will be shaped by new and conflicting factors. A strong wave of early holiday shopping means some consumers may have less to buy. Warmer weather in much of the country could make people feel more comfortable driving to the mall or make them feel less in the holiday spirit. And a surge in Covid-19 cases in the Northeast and Midwest could cause gatherings to be canceled or prompt shoppers to shift toward buying online or opting for goods instead of booking trips or concert tickets.

Conflicting clues

Steph Wissink, a retail analyst for Jefferies, said retailers and investors are watching for clues, but they tell very different stories. Among them, consumer confidence plunged to a 10-year low in November. Retail sales are up, but were weaker than expected in November. And some industry watchers and retail trade groups, including NRF, have predicted record-breaking holiday sales, even in a year of supply chain challenges and inflation. . . .

Options for procrastinators

Target said on Friday that customers can place same-day online orders as late as 6 p.m. on Christmas Eve and pick them up in a couple hours inside of the store or in the parking lot, with no need for a pickup window. . . .

Rosy forecasts – for sales and the weather

The NPD, a major retail trade group, has doubled down on predictions that holiday spending will hit a record high. It projected that sales in November and December could rise 8.5% to 10.5% from last year to between $834.4 billion and $859 billion. It raised that forecast earlier this month, saying that spending was on track to grow by as much as 11.5% year over year. The sales forecast excludes spending at automobile dealers, gas stations and restaurants.

More of those shoppers are early birds this year, however, with a record 42% of people planning to purchase their last gift before Super Saturday, according to an NPD survey in early December. That’s up from 40% a year ago and 30% in 2012, the first year when the trade group asked consumers that question.

More than half (52%) said they expect to pick up last minute gifts in the week before Christmas, according to NPD.

Weather may factor into how much people shop and what they buy, too. This year, the trends leading up to Christmas is expected to favor retail sales, said Evan Gold, executive vice president of global partnerships and alliances at Planalytics, a firm that predicts and analyzes consumer demand. (emphasis added)

Much of the U.S. has had mild temperatures, with this week on track to be one of the warmest mid-December weeks is over 60 years, he said.

Next week, temperatures are expected to be colder than last year in Canada, portions of the Northeast and the West Coast, but warmer than a year ago in the Southeast and Central regions. Rain and snow will largely be concentrated in higher elevation areas on the West Coast.

That means that customers won’t be detracted by inclement weather like ice and snow and can get to the malls and stores — which is key since some retailers’ shipping cutoffs have passed, he said. Though, he noted “light snowfall can be helpful in certain markets to draw seasonal demand.”

In January, on the other hand, temperatures are expected to drop compared with a year ago and help move merchandise at the end of retailers’ holiday quarter, Gold said. That could help clear away cold weather-related items, from sweaters and winter coats to snowblowers, as people redeem gift cards, he said.

Last-minute purchases could also lift sales for some retailers, said Craig Johnson, president for Customer Growth Partners. Jewelry purchases are often made late in the season by procrastinators or people who want to split their big purchases between two credit card statements, he said. Fragrances are another pricey gift that’s often purchased late.

Store traffic made a comeback from a year ago on Black Friday. With the rise of omicron, however, more shoppers may revert back to buying online and retrieving purchases through curbside pickup as they check off the final items on the gift list, Johnson said.

There will not be a reduction in sales, but a channel shift from in-person to online, going back the other way,” he said.

Click here to read the full original article.

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Using Product Demand Analytics to Direct Spend Towards In-Market Consumers

Got Budget?
Using Product Demand Analytics to Direct Spend Towards
In-Market Consumers

The “use it or lose it” budget conversations are happening now. Digital advertisers have budget to spend, but blowing through it won’t improve ROAS – you need to have a strategy and fast.  Smartly spend ad dollars where they will be most effective; understand how key demand-drivers will be shifting for specific products in specific markets.

Join Peer39 and Planalytics on November 18th to learn about:

  • Impacting sales before year-end (why you should care)
  • Product Demand Indexes: Where and when products are in market (what it is)
  • How to use the Planalytics Product Demand Index for contextual geotargeting (how to use it)
  • The increased ROAS you get by using the Product Demand Index (why you want to)

Register Now

 

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Historic Heat Wave to Shatter Records in the Northwest Region, Cooler Air to Parade the Rest

Showers May Disrupt Firework Displays for the Southern Tier and the East During the Holiday Weekend

By: Planalytics


As we approach a key week of the summer season, businesses are looking forward to favorable conditions to boost demand for summer apparel and consumables. With Canada Day on Thursday, July 1st, and Independence Day on Sunday, July 4th, many are planning for cookouts and fireworks to commemorate the holidays. Outdoor activities are customary, making Independence Day and Canada Day two of the most weather-impacted holidays of the year.

The run-up week will feature a strong, and potentially historic, heat wave across the Northwest region. Markets in this region will see temperatures soaring 25° F to 45° F above normal resulting in substantial lifts to demand for seasonal goods. Conversely, cooler than normal temperatures will gradually spread across the eastern two-thirds of the U.S. Showers are possible from the Southwest region to the East Coast throughout the week. Canada temperatures will mimic the U.S. with anomalously hot conditions across western provinces, and a cooler trend in the East. Showers and storms will also track across eastern Canada, while the balance of the country will enjoy drier conditions.

On Canada Day (Thursday, July 1st), there will be a split temperature pattern with a hotter than normal west, and cooler than normal east. The heat in the West will propel temperatures in British Columbia and Alberta 10° F to 15° F above normal and LY. Scattered showers will extend from southern Ontario to the St. Lawrence River Valley for the holiday.

 

 

For Independence Day (Sunday, July 4th), patriotic crowds across the western U.S. will experience record hot temperatures during their holiday celebrations. Alternatively, families and friends across the East will enjoy a cooler trend for the holiday. Showers across the Southern Tier and along the East may put firework displays on hold, while those in the West can expect drier conditions to continue for the holiday.

According to the National Retail Federation (NRF), 84% of consumers plan to celebrate Independence Day, which is up from last year’s 76%. The year over year lift is primarily due to more consumers planning to participate in traditional celebrations, such as fireworks and community celebrations, along with travel. The average spend has increased to $81 per consumer, up $5 from 2020.

For reference, Canada Day (07/01/20) was hottest since 2014 and driest since 2018. Independence Day (07/04/20) last year was hottest since 2018 and driest since 2012.

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