Lifeway Christian Stores’ shoppers’ needs differ from store-to-store — a factor that pushed the chain to revamp its merchandising processes.
For the specialty retailer, this has meant pursuing macro- and micro-localization strategies. From the macro level, the company still wanted to manage assortments that deliver a consistent brand experience – not only in terms of the products offered, but also in how they are stocked and presented.
However, as customers’ expectations continue to change, Lifeway knows it is paramount to cater to local tastes and preferences.
“No longer can universal assortments or even cluster-level assortments alone satisfy all of a local store’s customers,” said Bill Crayton, the retailer’s VP merchandising. “Micro-localization enables those at the store level who know their customers the best to influence the product assortment and presentation.”
However, an aging, customized merchandising system couldn't support this endeavor. The 12-year-old system managed several million store/SKU combinations — and mostly through manual and spreadsheet-based processes. Meanwhile, order quantities were predetermined based on static stock levels rather than dynamic sales trends — practices that limited ability to meet unique store-level assortment needs.
Lifeway was in need of a modern solution that could provide a ‘single version-of-the-truth’ across the enterprise, driven by calculated store-level sales data. It also wanted a solution that could allocate and replenish merchandise based on sales trends at individual stores.
“We didn't want manual intervention,” Crayton said. “We wanted a forward-looking forecasting process that was easy to use and had all the science built-in.”
The specialty retailer added a software-as-a-service merchandising solution from Relex that centralizes planning process and supports localized store-level intelligence. All users now view information from a store/SKU level, and have visibility to actual and forecasted sales, available inventory and merchandise allocated to pending orders. It also allows the retailer to set or adjust merchandising and inventory allocation parameters on a store-by-store basis.
“The solution also includes all e-commerce sales, inventory, and orders,” Crayton explained. “By integrating e-commerce performance into the solution, we are able to manage stores and online buying through one team, not two.”
Lifeway went live with a large selection of products by August 2016, and began rolling out the solution chainwide “as we entered the holiday season last year,” he added. “We didn’t have any major issues, and everything actually worked very well.”
First, Lifeway focused on macro-localization by centralizing assortment plans, clustering stores together and varying assortments within store groups. Dynamic store replenishment levels and parameters were set along with store-level forecasts and order points. A forward-looking demand forecast can also be shared with the company’s publishing arm and external vendors.
To embark on micro-localization, the solution infuses store-specific intelligence into the process, including assortment-specific requests, significant sales trends and special event awareness. For example, the solution helps store managers to promote local authors, which tend to sell well in their areas. Additionally, stores frequently host events that may require a one-time increase in inventory in specific items relevant to an event.
Further leveraging the solution, Lifeway is adding a mobile application that enables store managers and associates to engage with merchandising plans. Using store-specific customer behavior data, managers can add merchandise to their store’s assortment plan, and adjust their store’s minimum presentation stock. The mobile solution will increase the communication and collaboration between the centralized planning and store teams, and ensure that each store’s customers are better served and important in-stocks are maintained, according to the retailer.
Since adding the solution, Lifeway is better managing store-level inventory and assortments, “which has allowed us to improve inventory turnover, lower clearance inventory, manage markdowns and see margin increases,” Crayton said. “The solution eliminated past manual work and streamlined the ordering process.”
Lifeway is also planning to apply the solution to its promotion planning and forecasting processes. “We are working with Relex to leverage their forecasting solution to improve our promotion planning and ensure we have the products where they need to be when customers are ready to buy,” he added.