Are Merchants Finally Prepared to Invite Marketing into their Backyard?

For years, industry thought leaders have been predicting that marketing will soon have a seat at the merchandising table. I can remember RSR’s Paula Rosenblum, as far back as 2012, evangelizing the idea that the customer should be the fourth branch of the merchandise planning tree. Significant – and plentiful – research published at that time highlighting merchants’ struggles to understand customer preferences served to fuel Paula’s passion and also raised the quantity and volume of cries across the industry for merchants to invite marketing to the table.

And yet, almost half a decade later, very few merchants have truly embraced the customer as a legitimate and important part of the merchandising process. Despite a great deal of relatively recent research (including some sponsored by Aptos), indicating that – more than ever – retailers recognize the critical role that customer marketing must play in the merchandise and assortment planning process, most merchants still refuse to invite marketing into their backyard.  Consequently, merchants don’t really know or ‘get’ their customers and hence they are much more likely to miss  important shopper signals that could significantly inform many merchandising decisions.

The 2016 Are You a Merchandising Maven? Study from Retail Touchpoints and Aptos highlights the (mostly artificial) fences that still exist between marketing and merchandising:

  • Only 26% of merchandisers collaborate extensively with marketing colleagues
  • Only 39% use customer behavior and affinity data to tailor assortments
  • Only 39% indicate that they can react quickly to shifting customer trends

As a long-time participant in the Retail CRM industry, I see the challenges that these boundaries can create. Old hierarchies, antiquated processes, and “business as usual” decisions still force far too many retailers into developing assortments based upon what they want to sell, rather than developing assortments based upon what customers want to buy. And when that happens, retail struggles.

A recent Washington Post article entitled, “Why are sales suffering at so many women’s stores? They made bad clothes,” paints a pretty clear picture of what happens when retailers pay too little attention to consumer preferences when developing assortments. Spoiler alert: the picture isn’t pretty.

As a result, marketers and merchants alike are too often forced to look to Retail CRM solutions in a desperate attempt to develop discount and promotion strategies that can somehow mitigate the damage done by assortments that are simply not aligned to customer preferences. Instead of making intelligent buying decisions based on intimate customer knowledge, isolated planners make isolated decisions. Margins suffer, customer satisfaction dwindles and loyalty is irrevocably diminished. Ultimately, we end up training shoppers to look for discounts that are driven by poor sales results, rather than taking advantage of the true power of Retail CRM to develop personalized offers for high-value merchandise that reflects each shopper’s unique history, tastes and preferences.

Thankfully, however, it appears that things may, at last, be changing. The 2016 Retail Systems Research Merchandising Benchmark Report found that just about half (47%) of retailers surveyed believe that tailoring assortments to customer preferences is a top priority for improving merchandising processes. The researchers at RSR found that winners overwhelming believe that tailoring assortments to customer preferences is a top priority: 59% of winners, versus only 27% of laggards named it a top three priority.

Success stories from retailers with integrated merchandising and marketing processes reveal that adding CRM to merchandising has a two-pronged benefit cycle:

  1. Making better decisions up front
  2. Better marketing once merchandise is delivered

As these early results indicate (and as I indicated in the Retail CRM 2017 Outlook report that Aptos produced in partnership with Retail Touchpoints), I believe the time has come for merchants to permanently open gates in those fences that have forever kept them separated from marketing. It’s time to invite them into their backyard and embrace their insights.

And you know, even if most retailers are not yet ready to go “all in” to make the customer an equal part of their planning hierarchy, I do believe it’s time that every retailer give their merchandise planners access to relevant CRM data so that they can – at a minimum – access customer information in their dashboards and reports. This important first step will at least give the customer some influence on merchandise plans, price lines, and assortments, and it will definitely help merchants begin to tailor their approaches to specific markets and audiences.

Once more merchandisers begin inviting marketers into their backyard, it is my hope that marketing and CRM teams will, at long last, have more time to get creative and look for new ways to unleash the full potential of the CRM technology and strategies that they have built their careers around.

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