Losing money on unused inventory is disappointing for every retailer, but it's often unavoidable. Regardless of what method you use, predicting what customers will buy in the upcoming season is difficult. However, technology is making it easier for business owners to effectively manage their inventory and future purchases.
Traditionally, you could determine what products to order based on what items sold well the previous year, popular trends and industry forecasting. Nowadays, these methods can be used in conjunction with data gleaned from social media for more accurate predictions. Find out how you can leverage information for merchandise planning from your company's online presence.
An overall increase
Boston Retail Partners conducted a survey with retailers about their use of social media when they plan and order inventory for their stores. The data showed that there's been a 550 percent increase in how much business owners incorporate online information as they develop and purchase products. Almost 50 percent of retailers are using a combination of old- and new-school merchandise planning processes, and 25 percent of respondents have systems that allow them to track both in-store and online inventory in real time. Based on information from the source, the alignment of inventory predictions with actual sales can make or break each fiscal quarter because merchandising is all about matching the right product with the correct time and place.
"While some retailers rely on very basic tools like spreadsheets to manage their merchandise planning processes, progressive retailers are leveraging sophisticated business intelligence and predictive analytics to further enhance merchandise planning processes and decisions," Walter Deacon, a principal at Boston Retail Partners said.
Several big-name companies have adopted similar practices and have found them effective, Retail Customer Experience explained.
For example, Nordstrom uses information from its social media users to plan store displays. Whenever products are experiencing a lot of action of Pinterest, Nordstrom arranges the "most pinned" items in a separate display, which is an interesting take on showrooming.
Walmart and Sephora both have their own mobile apps that provide data on how popular certain products are, feedback from customers and general shopping patterns. Both apps allow customers to scan items in the store, make online purchases and browse available products. Sephora combined the launch of its app with the introduction of free Wi-Fi in all of its stores. According to Retail Customer Experience, more than 2 million people have downloaded the Sephora app, where they can access reviews and share purchases with friends.
How to make it work for you
Boston Retail Partners explained how social media isn't just for branding and building a loyal customer base anymore. It's a free database of facts about patrons and their preferences. Real-time information makes it easy to engage with customers and listen to their desires to effectively stock your store fixtures for a successful season. According to the source, the next step in the future of merchandise planning via social media is the customer's ability to make purchases directly from your profiles, rather than being redirected to the online store.
Applied Forecasting recommended tracking how many clicks your linked products receive on Twitter and Facebook, which can be done through Google Analytics. This will show you what's getting attention from the people who are already fans of your store. You can also run tests on products before you invest in the inventory by debuting new options on your social media pages. If you showcase what's coming down the pipeline and ask followers for feedback, you'll learn which colors or patterns will be in high-demand before they even hit the shelves.