Why Merchandisers Must Do More With Less in 2018
For most retailers, the essential job of space management — i.e., placing products and promotional materials in a store or network of stores — falls to merchandisers.
How essential, you ask? A vast majority of retailers (86 percent) believe there’s a correlation between space management and an increase in sales conversion rate, according to a recent survey from One Door. Space management helps retailers make better use of floor space to sell more, waste less and gain a competitive edge.
The paradox is that as space management demands are increasing, merchandising teams are being cut from retail payrolls. To stay competitive, visual merchandisers must do more with less this year to run more campaigns and promotions, experiment with new layouts and store formats, and localize how items are displayed in each individual store — all without working an 80-hour week.
How did we get here, and how can we help our visual merchandisers succeed? Let’s explore three contributing factors to space management demands, and how automation can help merchandisers do more with less.
More Personalization In-Store
Online retail has created endless aisles, accelerated the lifecycle of consumer trends, and, most importantly, produced an expectation among consumers that retailers will tailor and curate products just for them. When you have Amazon.com's algorithms automatically recommending related products you might like, how’s a brick-and-mortar store to compete?
This digital era places new demands on visual merchandisers, tasking them with retail strategies that bring online-level personalization into the store. Visual merchandisers are being asked to experiment with store formats and curate collections of products, as opposed to purely merchandising by category or brand.
Serving Millennial and Gen Z Consumers
Today’s millennial consumers and the Generation Z consumers behind them are mobile savvy, always connected, incredibly well informed, and ready to tweet about products or their retail store experience at a moment’s notice.
Don’t be fooled; just because these consumers grew up in a digital age doesn’t mean they shop exclusively on Amazon. Nearly all members of Gen Z prefer buying in physical stores to shopping online, according to a survey from IBM and the National Retail Federation.
In this environment, excelling at selecting and displaying products has become both more difficult and more important. Visual merchandisers must offer new products more often, tailor their assortments, and work closely with stores to create a consistent and logical experience across all channels.
Applying Automation in Space Management
Digital process automation, big data, analytics, artificial intelligence (AI) and machine learning, and mobile and cloud computing are table stakes for modern retail. According to IBM, 62 percent of retailers report that the use of big data is giving them a serious competitive advantage.
Sure, these are buzzwords, but they’re happening today. On the front end, retailers are deploying real-time product delivery, AI-powered conversational interfaces, curated subscription boxes, and other services. On the back end, these technologies help visual merchandisers plan and drive improvements faster in-store.
To do more with less, merchandisers must apply big data and automation not only for assortment planning, but also in three additional areas.
First, retailers must apply big data to space management and visual merchandising decisions. If a retailer doesn't use data in the process of locating products and promotional materials in-store, odds are four to one that it's a "retail loser," according to our survey. A visual merchandiser who understands that they’ll sell more of Product A when it's placed closer to Product B, and not near Product C, can plan more successful product launches. What’s more, data-driven visual merchandisers can help stores reduce waste by using SKU density metrics to determine accurate assortment counts for each store.
Second, using automation in space planning is critical to creating an agile merchandising process. As retailers build personalized and localized layouts for each store, automation is the only way to cut out repetitive work, save precious time and let visual merchandisers focus on strategic projects. It’s critical that these tools be designed for a business user and not a specially trained analyst. Again, retailers aren’t hiring these folks.
And finally, process automation is critical in organizing merchandising activity at each store. Our survey reveals that for 50 percent of retailers, store associates are spending 11 hours per week merchandising. Store associates could be spending those hours helping customers by providing a personalized customer experience. Limiting the time associates spend merchandising requires guided, tailored instructions as well as creating standard processes that can be easily followed.
The in-store experience is still the most immersive, influential touchpoint a customer can have, but maintaining an edge is time intensive for merchandisers. By equipping them with the right technology, retailers have incredible opportunities to improve performance across their stores.
Tom Erskine is chief marketing officer at One Door, a provider of cloud-based merchandising execution software.
Related story: How Technology Will Reinvent the Retail Store Experience