Demand Planning in a Crisis

This piece first appeared in WhichPLM on July 28, 2020.

Retail demand planning is both art and science even in the most stable of times, but today uncertainty is the name of the game. So how can brands and retailers navigate this, using data, technology, and smart manufacturing? Here are some tips and tricks for the days ahead.

Navigating Unpredictable Spending

We’ve been on the roller coaster of consumer spending over the past few months, and many of us are left with whiplash, trying to figure out what’s next. That’s the bad news; the good news is that there are data points that can help you cope with the unpredictability.

First up, customer listening should be your top priority during these times. In quarantine, people were locked into their screens, spending hours inside TikTok and Instagram, whether that was making music videos, googling banana bread recipes, or trying to find the softest sweatpants. As lockdowns have come and gone, the conversations, mood, and tone have been quickly evolving and will continue to do so. The point is that when you’re listening, you know the right products to be promoting and how to go about doing it with the right and relevant voice.

This listening isn’t a monthly or even a weekly activity, however, it ought to be a daily – or nearly constant – activity. As we all know, this is the pace at which our world now moves.

Speaking of knowing the right product to be promoting, understanding what’s going on around you – and specifically outside your four walls – is key. Even with your own historical sales data, there’s not much precedent for what’s unfolded over the past months. The best thing you can do is to consider your customers’ choices and look to the market outside. Many of our clients at StyleSage have been looking at competitive e-commerce data to answer questions that sales data can’t always fully answer like, “I’m sitting on aging merchandise, but how wide and deep should my discounts go?” or “Which products in the market are showing early indications of strong performance?” There’s no perfect “playbook” out of this crisis, but looking to other retailers, geographic markets, and industries can prove illuminating in times like these. (Shameless plug, our real-time COVID Dashboard helps you do just that.)

One thing’s for certain – no matter the outcome of the pandemic – digital social and selling channels will be a brand’s lifeline, and keeping an eye on the customer and competitive market makes confident and contextualized decisions possible.

Responsive Supply Chain

We all know that a supply chain is what gets us from idea to product on the “store” shelf. In fashion, the supply chain has always faced certain pressures, in one part cost-based, but another large part because themes and trends come and go quickly. And when you don’t have a nimble supply chain, in many cases your product is already dated the moment it becomes available, which means it’s going to have to be marked down sooner rather than later.

A responsive supply chain has many elements behind it, beyond just the manufacturing itself. One lever brands have is assortment structure, and how much of that is allocated towards core or seasonless items, and then how much is more trend-driven. The idea behind a flexible assortment structure is that first, you can have more planning time for the core pieces since they don’t drastically change season-to-season, and second, time is of the essence for pieces that are “trendy” and have a shorter shelf life. You want to strike a balance between these two groups.

Beyond assortment structure, you have to think about smart design. Can the materials you purchase be repurposed for many different types of products? If necessary, could this product shift to a different season or market if conditions change? Could it become a top instead of a bottom? (Hey – we all know tops are more popular than pants as we’re on Zoom calls all day.) Can you identify which design attribute(s) makes something current vs translatable to a different season?

Of course there’s the manufacturing piece, and many experts believe the near-shoring trend will continue to accelerate – beyond fast fashion and certain categories and price points. The additional advantage of near-shoring is that it gives brands the flexibility to conduct small tests of merchandise, rather than committing to large minimum order quantities with longer lead times at factories further afield.

Culture vs Technology

Any conversation around technology and processes has to take into account culture. You need the right tools to give you visibility into the supply chain, the competitive market, and the consumer headspace, but it’s your people whom you have to trust to take that data and make the right decisions. You can think of data and technology as the foundations to building that kind of organizational trust.

Without the right culture, insights and ideas pass through layers of an organization, and end up nothing like the original idea, in some cases a lesser version of what could have been.

As organizations have had to act quickly during this crisis, even with fewer hands on deck, it’s my hope that they continue to move with this kind of urgency, even as their businesses return to some type of normalcy.