The difference between the winners and losers in retail increasingly comes down to one factor: tech savvy.
The retail industry is undergoing significant changes in the merchandising process--at least, so says a recent survey by retail consulting firm RSR. The best of the national performers have picked up on a crucial strategy: Target your store's selection of goods to the needs and interests of specific communities. It's better for sales and for controlling costs. The savviest retailers know this and they're using technology to help give them edge.
How High-tech Has Changed the Game
According to the survey, firms that outperform industry averages for annual same-store sales comparisons tend to use and understand specialized computer software tools to manage specific aspects of merchandising. The most important tool was forecasting. Such systems help predict what goods customers might want and stocking patterns to satisfy customer demand while minimizing the amount of capital invested in excess inventory. Three quarters of the retailers surveyed said that retail forecasting is "extremely important" to financial success.
This is an interesting shift. In the past, forecasting systems were largely seen as supply chain management tools, where the focus was on reducing operational costs. Now such systems and techniques have become important to expand sales opportunities, moving from a strictly bottom-line focus to a top-line one. As RSR says, "Advances in hardware computing power make sku-level forecasts not only feasible, but imperative."
Almost equally as important as demand forecasting is customer analytics. This makes a great deal of sense. You can't create a good demand forecast without understanding your customers and what they might want. About 34% of the respondents plan to optimize product assortment for key customer segments this year.
