By David Kudas and Russell Parker, JDA Software
Historically, retailing has been driven by financial seasons (spring/summer and fall/winter) that were usually six-month time-frames. Retailers often constrained their purchasing and assortment decisions around these financially appropriate but customer-agnostic calendars. Customers don’t follow fiscally based seasonality – they shop based on their preferences and fast-changing trends. And in the new consumer-connected retail environment — driven by “always on” shoppers who often make buying decisions based on instant information gathered from multiple sources — first to the floor generates sales through the door.
As such, today’s retailers are beginning to think in terms of consumer-centric seasons and are transitioning their store floors during the year to entice and engage their customers. These new retail “seasons” can last anywhere from four to 13 weeks based on the optimal number of new product introductions, and they can also cross fiscal months and quarters. The key to success is to keep store assortments fresh at the pace that customers’ desire new looks and trends.
Consumer-centric seasons are defined by product lifecycles, from their debut and marketing to promotion and sell through. With an average lifecycle of perhaps six to 10 weeks, products are then replaced by the next season’s product grouping – either in entirety or simply by adding a splash of newness to revitalize the offering. Retailers must consider timing and quantity when determining product refresh details – but as always, the consumer is the barometer and gauge of the “season of opportunity.” For instance, fashion items usually have a lifecycle of from eight to 13 weeks based on time of year and color, pattern and style trends. Seasonal basic items cycle at 26 weeks, while continuity items are available all year. By segmenting product timing, retailers can create continual interest for their customers, ensuring increased store visits through the year. A real-world example is the transformation of Macy’s from a traditional four-season retailer to a reinvigorated lifecycle planning organization that generates change and constant product turnover.
Multiple seasons enable retailers to turn items over faster in hopes of enticing shoppers to return and purchase more often. This strategy requires that merchandise planning is in sync with what’s selling, which is achieved primarily through the assortment planning function. Keeping these two processes in lock step ensures that the strategic and tactical portions of driving the business are aligned.
Capitalizing on localized assortments and maximizing sales and revenue in the area that has the greatest customer propensity to purchase requires store groupings. These store groupings can be based on merchandise department volume and space and/or on geographic and psychographic customer shopping behavior patterns. And in general, with each season having a life of its own, retailers must plan accordingly. A customer-based strategic planning approach has four basic components: