Address key merchandising challenges

The retail industry is more competitive than ever. Previously unknown rivals are rapidly capturing market share as consumers with high expectations increasingly show their willingness to shop around.

To retain your customers and keep your edge, you need to make sure you have the right products available, in the right channel, at the right time, for the right price. But finding answers to key merchandising and marketing questions isn’t always easy. For example:

How much of each product should you stock?

Nobody wants to underestimate demand for certain products and leave customers frustrated and empty-handed. But overstocking is a big risk: holding too much inventory is costly and ties up funding. While companies have achieved gradual improvements in forecasting over the past few decades, significant challenges still exist that can cost retailers hundreds of billions of dollars annually. By understanding affinity patterns among products, improving demand prediction and identifying external factors that might affect sales, you can better gauge how much of each product to keep on shelves and online.

What is the best assortment in each category?

Analyzing social media and tracking trends helps you better anticipate customer choices that affect demand. By understanding preferences in different markets—as well as demographics, seasonal demand, and even popular color or flavor combinations—you can adjust and optimize the mix of products you make available on physical and virtual shelves to minimize returns and leftover, undesirable stock.

How can you improve the effectiveness of promotions?

A wide range of variables affect your promotion’s performance—from a streak of rainy weather to a win by a local sports team. In addition to considering seasonality and broad trends, analyzing localized external data can help you better determine what will work and what won’t in a specific market.

Tap into new sources of data

The days of relying on intuition for merchandising are long gone. Most merchandisers today recognize that data is central for accurate decision making. Unfortunately, few merchandisers are capitalizing on all available data. In addition to using internal, structured data collected from transactions and other customer interactions, you need to tap into external and unstructured data—including social media, news, local events and weather (SNEW)—for a more complete view of the issue.

By selecting advanced analytics solutions designed specifically for retail, you can analyze all data and produce insights that apply directly to merchandising decisions.

Maximize the value of analytics

How do you get there from here? You know that you need new analytics capabilities to improve merchandising decisions. But to make the most of any new analytics solution for retail, you must prepare your organization, start small and ensure data is protected at each step of the way.

Imagine it

Does your company have a culture that is ready to embrace analytics? You might have to build that environment from scratch. Make sure managers and executives understand how analytics can help with merchandising decision making. Then determine where you should apply analytics solutions for maximum impact and return on investment (ROI). Envision ways that analytics could work with current merchandising, marketing and planning applications and their data sources to deliver actionable insights.

Realize it

Ready to invest in an analytics solution for retail? Select a solution that is scalable so you can grow at your own pace, and flexible so you can meet evolving challenges. Start with a small implementation. Then extend analytics across the organization in every decision making process and use case where you see potential benefit.

Trust it

Be proactive about privacy, security and governance, whether you’re implementing an on-premises or cloud solution. Moreover, make sure the data you’re analyzing is accurate and trusted by immediately addressing any questionable data sources. Secure, trusted information gives you a solid foundation for generating powerful insights to guide merchandising decisions.

Enhance decision making with IBM Sales and Product Analytics for Retail

No single analytics solution answers all of your questions when it comes to optimizing your sales and product processes. You need a combination of analytics that tackle broad and specialized requests, handle structured and unstructured data, and identify all types of purchasing affinities.

Quite often, merchants and marketers must make decisions with limited time based on a narrow set of facts and intuition. IBM® Sales and Product Analytics for Retail is a comprehensive solution suite designed to help you capitalize on a full range of data to improve merchandising decision making. By offering advanced analytics capabilities and drawing on deep retail expertise and experience, this solution suite can help you make better merchandising decisions related to inventory, assortment and promotions.

Make smarter merchandising decisions: IBM Lift Insight for Retail

Put analytics at the fingertips of merchandisers and marketers to guide assortment, pricing, promotion and placement decisions.

Provide a deeper understanding of product performance and trends at different product hierarchy levels, stores, channels, customer segments and time windows.
Discover the relationship dynamics across products and categories using advanced analytical models—including affinity, association and basket analytics.
Evaluate key performance indicators (KPIs) to assess the health of the categories and overall business.
Apply advanced sales analytics models to surface hidden relationships between products and customers, as well as new purchasing patterns.

Optimize operations in every channel: IBM Demand Insight for Retail

Generate new insights into demand so you can optimize inventory levels and placement across channels.

Discover how external forces— such as social, news, local events, weather and others— affect hyper-local demand forecasts.
Fine-tune forecasting so you can make the right products available in the right places at the right time.
Coordinate demand forecasting across supply-chain, marketing and store operations executives.

Incorporate localized data and social media: IBM Social Media Insight for Retail

Analyze social media along with hyper-local unstructured data to fine-tune merchandising, and increase the effectiveness of marketing and promotion activities.

Provide a deeper understanding of product performance and trends at different product hierarchy levels, stores, channels, customer segments and time windows.
Gain insight into customer perceptions about shopping experience and product attributes such as price, quality and convenience.
Improve pricing and promotion decisions by using consumer comments and reviews to better anticipate their behavior.

Deliver a rapid—and large—ROI

IBM Sales and Product Analytics for Retail facilitates rapid implementation and lets you avoid the need to rip and replace current solutions. You can begin to see tangible results in weeks, not months. Choose cloud-based capabilities to further accelerate deployment while maximizing flexibility.

With new insights at your fingertips, you have the backup you need to ensure you have sufficient stock and the right assortment on hand to meet customer demand. You can fine-tune promotions to boost success rates. And you can reduce costs by minimizing overstock situations and speeding product turns. These and other benefits will be rapidly amplified as you apply new insights across your retail stores and channels.

Develop smarter merchandising and supply chains

A pet retailer generated more than USD200 million through sales of affinity products associated with live fish.

Deliver a smarter shopping experience

A clothing retailer increased the speed of merchandising decision assessments by 98 percent.

Build smarter operations

By better understanding the impact of external influences (such as social, news, local events, weather and so on), a general merchandise retailer increased forecasting accuracy by 17 percent.

Take the next step

Find out more about how you can fully capitalize on all available data to improve merchandising. Check out these resources for trends, advice, product details and customer success stories that will help you build and implement a successful analytics strategy.

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June 2016

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How can you improve merchandising decisions?

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