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Leveraging the 13 Seasons of Retail to Achieve Consumer Centricity

BY CSA STAFF

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.

Lifecycle Planning
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.

Merchandise Planning
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:

  • Determining the number and start/end dates of seasons, through selling-pattern analytics and market trends
  • Building customized assortments to reflect the season and localized opportunities
  • Reconciling the seasonal plan with the overall financial plan to ensure consistency and flow of product
  • Understanding the dedicated product lifecycle in the context of the individual season:
    o When to receive it and allocate it
    o When to fill into sales
    o What desired inventory and sell-through is to make each season profitable
    o When and to what degree to mark it down
    o When to transition to the next season

Planning requires a dedicated business process of assorting, buying and liquidating for that individual season to optimize both customer experience and profitability. A retailer must reconcile the amount of product it anticipates selling, the expected margin, and the marketing, promotion and inventory velocity with its financial plan in order to be profitable.

Assortment Planning
Of particular importance is building customized assortments for not only seasonal opportunities, but also for localization. For instance, back-to-school times and needs are different across various geographic regions. While heavy sweaters won’t be big sellers in Texas in August, they may need to be in Minnesota stores. Swimsuits will sell in Florida year-round but not in Maine. By strengthening and refining the assortment planning process to reflect seasonal and localized customer requirements, retailers can realize tangible benefits including increased capital and inventory productivity, improved quality of service, reduced operating costs, revenue growth, and faster process cycle times.

Conclusion
Successful retailers are embracing consumer-centric assortments with timely transitions that are not managed or gauged by a fiscal calendar. They have recognized the necessity of a consumer-centric culture in which their employees understand that there are numerous lifecycles, not just fiscal cycles. They also understand the need to engage customers in more personal ways and give them a reason to come into their stores more than two or three times a year. In leveraging consumer-centric seasons, retailers can delight their customers while optimize sales, inventory investment and profitability.

David Kudas and Russell Parker are directors, strategic services, at JDA Software.


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CVS/pharmacy launches in-store fundraising campaign for ALS, cystic fibrosis research

BY CSA STAFF

WOONSOCKET, R.I. — CVS/pharmacy has launched a new in-store fundraising campaign named Advancing Medical Research, to support medical research and help improve the quality of life for those living with amyotrophic lateral sclerosis (ALS) and cystic fibrosis (CF). Funds raised through the campaign will benefit the ALS Therapy Alliance (ATA), a leading organization dedicated to advancing ALS research, and the Cystic Fibrosis Foundation, the world’s leader in the search for a cure for cystic fibrosis. Supporters for the 2012 campaign can donate $1 or $3 dollars at the register in CVS/pharmacy locations and online at www.cvs.com/alscff through June 30.

Treg Charlton, a regional director of real estate for CVS Caremark living with ALS, and Brenda Fox, a CVS/pharmacy store manager and parent of two children living with cystic fibrosis, will serve as campaign co-chairs.

"As a national leader in health care, CVS Caremark works with a number of nonprofit partners that align with our purpose and are focused on helping people on their path to better health. For more than ten years, our in-store campaign supporting the ALS Therapy Alliance has been a tremendous success and we’re excited to expand our efforts to help those living with cystic fibrosis this year," said Eileen Howard Boone, SVP corporate communications and community relations for CVS Caremark. "We want to thank our customers and colleagues for continuing to support this very important annual campaign. Together, we can drive medical research for both of these causes in the hopes of finding a cure for those living with cystic fibrosis and ALS."

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Revenues, earnings soar at Neiman Marcus

BY CSA STAFF

DALLAS — Neiman Marcus reported total revenues of $1.06 billion for the third quarter compared with $983.8 million in the prior year. Comparable revenues increased 6.7%. Operating earnings for the third quarter of fiscal year 2012 were $146.6 million compared with $123.2 million for the third quarter of fiscal year 2011, an increase of 19%.

The company reported net earnings of $62.6 million for the third quarter compared with $46.2 million in the prior year, an increase of 35%.

For the 39 weeks ended April 28, the company reported total revenues of $3.34 billion compared with $3.08 billion in the prior year. Comparable revenues increased 7.9%. The company recorded operating earnings for the 39 weeks of $378.1 million compared with $312.3 million for the comparable period a year ago, an increase of 21%.

The Company reported net earnings of $151.1 million for the 39 weeks compared with $93 million in the prior year, an increase of 63%.

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