The Limited's New Approach to Inventory Planning
With 250 stores and robust e-commerce and mobile sites, The Limited is challenged to identify and truly get to know its 3 million customers. Not surprisingly, gaining that in-depth knowledge of its customers is a key priority for the women's apparel retailer. In a session yesterday at the National Retail Federation Big Show in New York City, Lois Huff, vice president of client insights at The Limited, discussed how the retailer is leveraging consumer analytics to make better inventory decisions.
The Limited is client-focused – the retailer doesn't use the term customers – and targets sophisticated professionals. That rather broad segment crosses demographics and lifestyles, Huff noted. The brand's customers are focused on both their careers and wardrobes, and are defined by attitude.
“Striving to lead an unlimited life” is the motto that we assign to our customers, Huff said. The Limited takes that client mind-set into account when it makes inventory decisions. What used to be based on the brand's heritage – we had a disciplined approach to merchandising planning based on company financials – and design vision from its longtime CEO Leslie Wexner, inventory buys are now characterized by balanced, client-led decisions. Three factors are balanced: business, design and brand.
The Limited has partnered with First Insight, a company that provides real-time predictive information on products that have no sales history, to help it gain knowledge of customer intent before introducing a product to the masses. Prior to working with First Insight, The Limited did a lot of product selling testing one year to two years out to see if merchandise would resonate with its clients. Now it's able to test many more products much faster (weeks, not years) while still receiving statistically valid results.
With quick access to client intent data, The Limited is better able to gauge what products will be winners, and thus need to be brought to market, and what products are likely to be losers and thus discarded or bought in much lower quantity. Early identification of product adjustments can also be made, enabling some products that would have been labeled losers to be turned into winners.
Furthermore, The Limited is using data from First Insight to help it optimize pricing. Analysis of pricing data – cost of the product, company financial objectives, market conditions – identifies the products that the retailer has “some play with” when it comes to margins, Huff said.
“First Insight helps our merchant teams make smart decisions, and have confidence in those decisions,” Huff noted.
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