MERCHANDISE PLANNING, the main discipline of retail, has been overshadowed by popular concepts such as Digital Transformation, E-Commerce, Artificial Intelligence these days. And today, at a stage where we’ve left digital transformation behind and are starting to talk about Artificial Intelligence, to write something about Product Planning will perhaps be seen as a topic two or three stages older.
Frankly, in this article, I have targeted organizations that have not yet made a healthy transformation from storekeeper to retailer in an age where change is advancing at a dizzying pace, the intervals between phases are shortening and the phases are intertwined like the seasons. Maybe there will be a sentence I should say at the end, but I will say it from the beginning; If your infrastructure is not solid, you may be overwhelmed by the effort you have spent to establish the structures required by the new stages.
As long as the fact that the largest share of the company’s resources for retail is stock does not change, the importance of Merchandise Planning processes and systems in the organization will not change, whose main purpose is to manage this largest share of capital invested in the most accurate and most efficient way and thus to maximize the return on investment. Merchandise Planning will continue to be one of the most important driving processes of the organization as long as this reality exists.
Merchandise Planning aims to manage the resources invested in the stock of companies in the retail sector in the most efficient way. It is a union of disciplines that has emerged to manage hundreds of right things, as in a few examples below;
Buying the right product at the right time, in the right quantity, at the right cost,
Then, offering the product at the right sales points, at the right time, with the right price and discount, in the right combination,
As a result, to satisfy the customer’s truths that have turned into expectations, to obtain the loyalty of the right customer base.
However, when I say discipline, don’t instantly think of standard structures and processes. That’s right, Merchandise Planning is a union of disciplines, but it is also flexible. And you need to blend this discipline with your company’s DNA. Companies have hundreds of DNA fragments such as organizational structure, supply chain capabilities, product range diversity and heterogeneity, sales channels and sales points structure, customer profile and expectations, logistics capabilities, product development capability and speed, and so on. All of them have to be considered by your merchandising planning system.
Unlike other disciplines, the flexibility level of Merchandising planning systems is very important. For example, Accounting systems is also a union of disciplines, but it is not flexible. On the other hand, it is very difficult to talk about a discipline or a rule in design processes, it is very important to have flexibility.
With well-designed Merchandise Planning systems, you can plan your future more accurately and avoid missing sales due to lack of stock, and get rid of the excess stock.
Here, I want you to take a breath and ask yourself the following questions;
Ask Yourself The Following Questions for a well-designed Merchandise Planning System.
How to decide which products to sell next year,
How the product mix is determined,
How to determine how much to buy from which product group,
How to decide how many of which product to order,
How to measure the accuracy and accuracy of these decisions,
Do you monitor the overbought products, how much is the rate,
Are there any products that are under-purchased and can this deficiency be compensated, or do they hide under the mask of “we sold it very well”,
In fact, every new stage is coming by adding something to the Merchandise Planning discipline. For example, with e-commerce, e-Merchandising comes into our lives. We are talking about reducing stock replenishment periods from days to hours, minutes, or even instantaneous levels. Yes, we have a store, but our shelf, capacity, etc. problems have been replaced by other problems.
Then we talked omnichannel, we discussed that stocks should be available online to all channels. We talked about how Omni-channel has made serious changes in customer experience, we met dozens of new concepts such as Search Online Buy Offline, Shop Online Pick up in Store,… and we discussed how these affect our Assortment Plan strategies.
We embarked on the journey of becoming a Customer-Centric Organization, and now we have begun to add the customer dimension to the concepts of price management. We started to define customer-specific campaigns. Artificial Intelligence had previously touched on Merchandise Planning processes. We were doing replenishment with smart algorithms and using different optimization techniques in the transfer between stores. But now we are talking about the effects of concepts such as self-learning, augmented reality, image processing on retail.
Yes, we should not miss all of these… but I want to go back and repeat my beginning question; How strong is our infrastructure?