Balancing art and science: 3 strategies to adapt and compete for customers

In an increasingly complex retail landscape, the key to success for retailers still lies in placing the customer at the center of everything by offering the right products to attract and retain them. In today's market, this endeavor requires a constant balancing act between creativity and retail data science to develop an effective merchandising strategy to deliver the right assortments for customers while maintaining healthy profit margins.

To navigate the myriad of nuanced decisions that need to be made in an ever-evolving market, successful retailers are making strategic shifts to integrate all core processes, such as assortment planning, financial planning, pricing, procurement, allocation, and space management, into a more cohesive retail strategy. Purpose-built tools with embedded analytics, such as Retail Assortment Management Applications (RAMAs), enable retailers to move away from organizational silos and support more streamlined and unified commerce processes.

According to Gartner's Market Guide for Retail Assortment Management Applications, "retail assortment management applications are foundational for modernizing merchandising processes as part of a digital business transformation strategy in unified retail commerce." RAMAs empower retailers to leverage advanced analytics and artificial intelligence tools combined with near real-time data to curate intelligent assortments to meet shifting consumer needs. Such intelligent assortments enable retailers to offer market-relevant styles, colors, and SKUs that align with customer needs and desires. Allocation solutions can take the assortment plans and updated real-time sales performance to execute an appropriate allocation plan that provides the right product at the right location.

Three key retail industry trends

1. Innovation - Shift to circular customer-inclusive merchandising

Gartner's Market Guide states, "by 2027, a tectonic shift to circular customer-inclusive merchandising processes will disrupt merchandising organizations as product hierarchies become extinct". In light of this trend, successful retailers are considering purpose-built applications to leverage customer behavior hierarchies to effectively forecast, plan, allocate, and price assortments to cater to how their customer shop in a nimble and targeted fashion.

2. Closer to Customer - Demand for curated assortments to align with customer lifestyles

Although consumers want variety in assortments, too much variety can be overwhelming. Hence, it is important to create plans tailored to shoppers' specific needs. The pace of technological advancement, along with ever-changing consumer shopping habits and needs, is driving retailers to accelerate the use of RAMAs. Such applications enable retailers to create an intelligent curation of assortments based on market-relevant styles and colors aligned with consumer tastes. Therefore, retailers are investing money into strengthening their technology advantage to effectively bolster their market positioning amidst increasingly intensifying competition. As per Gartner's market guide, "by 2025, all global multichannel fashion retailers will use AI and automation to create more targeted assortments, reducing item choices by up to 30%."

3. Agility - Need for granular store-specific assortments

Implementing RAMAs empowers retailers to create store-specific localized assortments (rather than the traditional approaches of creating clusters). According to Gartner's Market Guide for Retail Assortment Management Applications, "Gartner predicts that by 2024, Tier 1 retailers in North America and Europe will reduce inventory carrying costs by 30%. This will dramatically improve and free up cash flow for digital investment while revamping balance sheets. Much of this reduction will be affected in seasonal, short life cycle and apparel categories where manual processes, legacy technology, and gut feel are no longer enough; they are woefully inadequate."

While assortment creation has always been at the heart of retailing, RAMAs and other business applications are increasingly becoming the adaptive technology backbone for retailers.

How to enable a unified retail commerce strategy

Oracle Retail's Analytics and Planning solutions allow retailers to tap into all these key trends and create robust cross-channel assortment plans by leveraging its powerful Retail AI Foundation to improve business outcomes. It enables retailers to execute a unified retail commerce strategy with its unified data model that makes real-time, accurate, and consistent information available across all applications.

The Oracle Retail Analytics and Planning platform supports retailers with AI capabilities that help them drive sales, strategically deploy markdowns, and avoid stockouts. Retailers can use AI-powered modules such as Customer Management and Segmentation or Customer Decision Trees and Demand Transference to better understand customer behavior, then forecast demand more effectively and build product assortments to meet it. These capabilities help retailers keep customers at the core of every decision by incorporating customer data into all processes across planning, supply chain, and omnichannel retail management. They empower retailers to drive profitability and remain flexible in the changing retail environment.

The impact of technology on retail is a game changer. Implementing modern assortment management applications is becoming increasingly crucial for retailers to remain relevant for their customer base and capture a greater market share in an increasingly competitive retail environment.

Request an Analytics and Planning demo to see:

• Connected Enterprise Planning: Utilize a retail platform at scale, driven by advanced analytics to drive the end-to-end planning of your business. From finance teams, to merchandise planning, and supply chain, see how you can provide a collaborative, reconciled enterprise planning ecosystem.
• Hit the Mark with Assortment Management: Align assortments using a highly visual, end-to-end workflow. Define and execute local market assortments, improve traffic conversion into higher sales/margins, and increase customer satisfaction.
• Balancing Price and Margin: Pricing is one of the most important strategic areas retailers use to gain market advantage. The challenge retailers face in making the right pricing decisions often stems from inaccurate, fragmented, or sometimes too much information to find the right actions.
• Advanced Analytics for Retail: Develop strategies to anticipate and influence your customers' next moves with analytics applications that are approachable and easy-to-use for staff without data science skills. Or, have your data science teams take advantage of the open platform to build their own models.