Merchandise Planning

Assortment Planning

2007-06-08T16:08:00.000+01:00

Here's something a bit different? Ideally you'd want to see this for one single store grade by phase as well. I can't stop playing with this - it's very gratifying to see the range suddenly appear visually!

Nice to see a client doing well!

2006-10-10T12:20:00.000+01:00

Sainsbury TU clothing have increased sales by 65% in the 2 years since they launched.

I recall that one Merchandise Planning vendor on our forum tried to blame the misfortunes of several US companies on their use of one of his competitor's merchandise planning software offerings. That wasn't very fair so I don't suppose I can claim too much credit for the fact that TU clothing use our Impact Planner software, but it's nice to think we might have made a small contribution!

If you can't stand the heat....

2006-09-29T08:40:00.000+01:00

So the "Achieving Merchandising Excellence in Fashion Retail" conference came and went.

There was some interesting content which I may comment on once I have had a chance to digest it. I missed the end though because I just couldn't stand to stay in the room any longer. This had nothing to do with the content or the company.

The room at the Cafe Royale was so cramped that we were jammed in with shoulders touching the people next to us and the air conditioning, on a moderately warm late September day, simply couldn't cope.

It takes a lot for me to walk away from something interesting that I have paid good money to attend, but this venue was just the pits.

I was really starting to feel decidedly uncomfortable by about 3 p.m. so I made for an early train.

Let's hope Drapers choose a better venue if they run another of these, or they certainly won't get any repeat business from me.

Ah the poor dears!

2006-09-29T08:03:00.000+01:00

On the one hand:

"The British Retail Consortium (“BRC”) has argued that, in a time of rising property costs and falling retail sales, landlords should abandon the traditional requirement for rents to be paid three months in advance in favour of rents being paid monthly and in arrears. The campaign is intended to improve struggling retailers’ cash flow and bring property more in line with ‘standard business practice’.

On the other I get this from a client:

"Dear Sir ,

"I am writing to inform you that our payment terms will change to 60 days. This will bring BadCo in line with the the terms used by the majority of businesses in the retail sector"

The words "Have", "Cake", "Eat" and "It" it spring to mind ;-)

Perhaps I should write back telling them that my response times have gone from immediate to next day for those clients who don't pay on time according to our mutually agreed terms.

Obviously I won't, but I shall be adding one month's worth our standard late payment penalty of 2% per month to all invoices (just to keep in line with standard consultancy industry practice you understand) .

They will then have the option to pay according to our mutually agreed terms and not pay the penalty. Time is money after all.

Maybe I'd feel different if they had thought to discuss this rather than just telling me, (but I doubt it).

The £17 Million squeeze?

2006-09-25T13:10:00.000+01:00

According to Retail Week "Debenhams has written to a number of suppliers demanding a 2 per cent cut in the price the department store pays for goods. Bhs, Arcadia and Marks & Spencer have all made similar moves to get better terms from suppliers."

That probably equates to a full 1 percent hike in Gross Margin if they can achieve it which on sales of £1.7 billion would equate to £17 million if it was successful across the board!

So have Debenhams buyers been being ludicrously generous to these suppliers in the past? I find that hard to believe, but if not and the previous deals were fair to both sides, then you have to ask if this is a viable long term strategy. as it relies on the suppliers still being around to deliver the stock doesn't it ;-)

Of course you might argue that in the face of constant retail price deflation they are just sharing out the pain.

You have to wonder how long we can expect to see men's trousers being sold for less than £5 though.

Merchandising gets some attention

2006-09-25T10:55:00.000+01:00

For the first time for a long while the UK is having a conference dedicated to Merchandising and Merchandise Planning - Achieving Merchandising Excellence in Fashion Retail.

It is taking place on Thursday September 28th 2006 in London.

It promises to be interesting - if I get time I'll post some comments here.

At the same time there seems to be an increase in interest in planning solutions all of a sudden. These things tend to be cyclical - I recall that a few years ago Merchandise Planning was on the agenda at every conference here, but of late it seems to have slipped off the radar a bit. Last time I saw a similar increase in interest it co-incided with a downturn as things got toughter. Hold on to your hats!

Are we like daffodils?

2006-03-20T09:52:00.000Z

In the UK Sunday Telegraph this week there was an article that suggested that the emergence of flowers like daffodils was dependent on the number of days where the temperatures exceeded a given level (Growing Degree Days) - I think the article suggested it was 6 degrees C. For daffodils the figure was 50 positive days +/- 10. Negative days don't count as there is no such thing as negative plant growth. This allows you to predict with some certainty when the daffodils will appear in any given area.

I wonder if a similar principle could be applied to consumer behaviour with regard to purchasing spring/summer ranges. It would be interesting to test the theory. I suppose that the problem would be that a:) weather is local and b:) long range weather forecasts are pretty unreliable.

Back again!

2005-10-04T15:04:00.000+01:00

It's amazing how things like this blog get forgotten in the face of a large volume of real work!

It's been an interesting summer over here in Europe with the trade "problems" with Chinese goods dominating the retail news. Rampant protectionist disguised as naivete seems to have been the order of the day. Italian manufacturers who have had years to anticipate the end of the MFA were apparently taken by surprise by the volume of imports and need time to adjust.

The UK government surpassed even themselves in a demonstration of total lack of understanding of the retail market. It never seemed to occur to them that lead times and plans were in months not hours, and that supporting a quota on imports with no notice was going to damage an awful lot of retail businesses (Mind you this is a government that thinks retrospective tax legislation is a fair way to deal with people)

Our merchandise planning training course has been gaining in popularity. We have some very good feedback and look forward to continuing to shed a little light on this area. Maybe we should add a chapter on anticipating government legislation in the Strategic Plan!

Imitation is the sincerest form of flattery!

2005-05-18T01:59:00.000+01:00

"Meanwhile, i2 also unveiled a deal with Microsoft, which would enable customers to use Excel as an interface for i2 applications. Executives at i2 admit that end users frequently prefer to use Excel as entry point to supply chain planning because of unfamiliarity with its own tools; integrating i2 applications with Excel should lower barriers to adoption.
....i2 is also revamping its sales structure, placing a greater emphasis on consulting and pre-built application aiming to reduce the complexity of deploying its applications."

Infoconomy 13th May

Some of us have been using Excel as an interface to robust planning applications for years! Our own IMPACT Planner for one.

But putting a spreadsheet in front of the users is only part of the issue - you have to give them performance that sings too! You don't seem to get that from the monster ROLAP based planning systems these days (in spite of their inflated price tags)

How many WSSI applications out there can load a full year's worth of history data and calculate a top level summary in less than one minute? We can do that with IMPACT Planner!

It would be fun to do a Merchandise Planning Olympics and to measure the performance of the behemoths against the nimble, smaller players in the game. It's not too much of an exaggeration to say that most of the "major" systems would still be loading their splash screens after we had finished!

I wonder if the last part about "pre-built applications" means that they are resuscitating the old Quickstart model from the late 90s! I don't suppose anyone is going to argue that the major cause of merchandise planning project failure is over-complexity, but am I alone in wondering how you square off "placing a greater emphasis on consulting and pre-built application aiming to reduce the complexity of deploying its applications". I can see how the latter works, but I am not sure how more consulting does that. After all it's not often you find consultants who "reduce complexity" ;-)

Margin Support

2005-05-11T16:54:00.000+01:00

It is interesting to read about the problems that Saks are facing in the US about improper collections of vendor markdown allowances".

I have never been a big fan of retrospective discounts of any sort as they are often used to wrong foot the inexperienced buyer or seller, and they obscure the view of achieved margin

(How many of you have margin reporting systems that show you the actual or potential effect of overriders and /or other retrospectives?)

Also, asking your suppliers to "support markdown" is effectively asking them to take the stock risk for you, which is like having your margin cake and eating it. Nice if you can get away with it
I suppose, but maybe not the best way to ensure a robust and responsive supplier base.

This is really the antithesis of the Quick Response projects that I worked on in the 90's

Couple that with the fact that in the UK at least many retailers insist on 90 day payment terms, so they would probably end up asking for the markdown support payment before they had paid for the goods, and you can see why I think that a training course for buyers on "keeping a straight face when dealing with suppliers" would be a real money spinner ;-)

Skiing Off Piste

2005-05-06T01:30:00.000+01:00

April 1 - Retail Week carries the following

"Staff often don't realise that technology matters," says Ruth Ziman, manager at consultancy Kurt Salmon Associates. "That's where change management comes in. Planning systems are often not used and staff revert to using Excel and re-key all the information into the expensive planning system afterwards - we call this skiing off piste. A good management team with poor tools will do the job better."

I have actually seen exactly this happening in "a major retailer".

Isn't it scary how a company can pay over a million pounds for a system and then not use it.

But skiing off piste? isn't that what the experts do?
I think I would call that reverting to the nursery slopes, or skiing on planks.

Sad but true!

2005-04-20T13:33:00.000+01:00

Amusing quote from Baird's Retail IT Review - April 2005

"It is worth bearing in mind that the most important thing for a retailer is having the right products in the right place at the right time,and although lots of technology purports to help them do that, many retailers believe that it is best done by a team of managers and buyers using Post-It notes, Microsoft Excel and a fax machine. Many retailers regard the art of selling as having precious little to do with technology"

I think they are being a little extreme here, but there is a kernel of truth in what they say.

However, can you blame the retailers, who have been buying expensive "end to end" solutions and spending millions of pounds in the process, for becoming cynical about the claims of the systems vendors, and reverting to lower tech solutions?

I am not sure that post it notes and faxes are quite where we should be taking them, but then again I am no great fan of "integrated" ERP solutions either.

It's always sad to lose a client!

2005-04-19T18:44:00.000+01:00

So Index has finally gone.

We were working with them on the merchandise planning process when all of a sudden everything just stopped a month or so ago. Now we know why!

It's a sad day for us but it just means a lost project. To most of the 3,500 employees it's a bit more serious than that.

It's funny that we haven't heard the government jumping on this bandwagon like they did with MG Rover the week before! Where are the state handouts here then? Rover has been leaching the tax payer's money for years, but it seems that they are more newsworthy (or should that be voteworthy?) than a few retail employees in Liverpool!

It's a pity too as Index were really starting to address the issues that had dragged them down for so long, and had attracted some very bright people to help them do it.

Good luck to them all anyway!

"Solving Out-of-Stocks: Are We There Yet?"

2005-04-13T00:03:00.000+01:00

Apparently not!

"Industry estimates indicate that most consumer packaged goods (CPG) manufacturers lose between 8 - 10% of revenue per year due to out-of-stocks." - Craig Silverman, VP Product Management, Information Resources, Inc.

Whilst this info is being used to sell a conference, it is still interesting to note that they are talking about CPG. CPG is normally defined as "consumable goods such as food and beverages, footwear and apparel, tobacco, and cleaning products". Note that we are including food here.

Whilst my local supermarket is pretty bad at keeping the shelves full, I would expect to see a still greater loss outside FMCG - in apparel for instance.

Scary stuff that underlines the need for streamlined and efficient merchandise planning processes!

How to make yourself loved by your future "subjects" Part 2

2005-04-05T19:40:00.000+01:00

Well I stand corrected - apparently everybody is selling out of memorabilia for the wedding of the century!

Maybe the happy couple have done the tat merchants a favour after all ;-)

Attics across the world will now be stuffed with commemorative mugs and plates in the hope that they will one day be worth a quid or two more, and we won't be able to escape from images of the gruesome gurners at car boot sales for the next twenty years.

(Yes, you are right, I am not a monarchist ;-)

How to make yourself loved by your future "subjects"

2005-04-05T16:53:00.000+01:00

So you are trying to plan demand for your Royal Wedding memorabilia (Nobody ever went broke by underestimating the taste of the British public).

You do some great analysis of similar events, you get your merchandise designed and manufactured, and then 4 days before the event they change the date.

If anyone looking for cheap tea towels with pictures of deeply unattractive aristocrats on them, there should be plenty about!

Apparently these things won't soar in value either. Last time the Royal family pulled a similar stunt with the coronation of Edward VII, the stuff with the right date ended up being worth twice as much as the stuff with the original date, so don't start spending that new E-bay fortune just yet ;-)

RFID to the rescue

2005-03-31T17:53:00.000+01:00

One of the main issues when implementing Merchandise Planning is the quality of data. There are a variety of reasons for this, but one of the main ones is the infrequency and inaccuracy of stock counting.

RFID is set to change all this. WIth RFID the retailer will know where each SKU is at all times, thus dramatically improving the quality of data available as a historic basis for planning, and on an actual basis for reforecasting.

Of course there will still be room for processing errors, but expect the quality of base data to improve dramatically. Now retailers just have to decide what to do with the data!

JDA coming into play?

2005-03-31T01:55:00.000+01:00

"Whichever way Retek goes, analysts expect more acquisitions from the leading suppliers. In Larry Ellison's words, the retail sector "is underpenetrated and not dominated by any one company".

The battle for Retek may already have put its smaller rival JDA Software into play. "

Now that would be interesting. Any bets?

So Oracle have won the battle for Retek.

2005-03-24T21:34:00.000Z

It seems like the more logical merger of the two but the line56.com commentary quotes AMR as saying

"Oracle needs at least a fourfold increase in retail-centric revenue ($700M to $800M per year), with at least double the profit percentage that Retek has seen in recent years, to have the deal make any financial sense...".
And then we have the SAP sour grapes ;-)

"SAP offered its viewpoint in a press release, saying that, as a "disciplined investor," it didn't want to pay an inflated Retek price that "in the long run, [would] not deliver the returns we demand."

It'll be interesting to see what develops!

"As If" analysis Part 2

2005-03-22T21:50:00.000Z

"Fashion sector bellwether Next unveils full-year figures next week, and much of the focus is likely to be on recent trading performance.
Bad weather has hit clothing groups..."

It's amazing that the planning done in these businesses is so finely tuned that something as utterly unexpected as a smattering of snow in March can upset the applecart isn't it ;-)
You might expect that a bit of cold weather in March would help clear the remaining Winter merchandise...

...and of course, if we don't venture out to buy Summer merchandise in March due to a bit of bad weather, most of us decide not to bother with the new season at all don't we ;-)

Is the logical deduction from all this that UK Retail forecasting is hopelessly optimistic and totally fails to take into account banal and predictable events like a spot of bad weather?

Or is it that unrealistic pressure from the city forces retailers into making these unrealistic and undeliverable forecasts in the first place?

Two bald men?

2005-03-22T14:32:00.000Z

"Retek Inc., a struggling producer of retail applications software, seems an unlikely target of a bidding war between SAP America and Oracle...."

I can't help thinking of the quotation about "two bald men fighting over a comb".

Funny, I tried to find the quote - I thought it was Churchill but it seems to be more modern.

The best provenance I can find is that it was the Argentine writer Jorge Luis Borges referring to Britain and Argentina fighting for the Falklands / Malvinas.

Anyway, it seems fairly apt ;-)

Retek Saga Rumbles On!

2005-03-18T22:58:00.000Z

"Oracle upped its takeover bid for Retek to $11.25 late Thursday, a move that comes less than 24 hours after competitor SAP raised its offer price for the retail software applications company. "
There is an interesting article about the motivations of the companies involved here

Advertising a Merchandise Planning Course

2005-03-16T21:52:00.000Z

So Google doesn't like my advert!

AD TEXT:
e-Learning CourseAn Intro to Merchandise Planning"a terrific resource", "invaluable"www.planfact.co.uk

Action taken: Suspended - Pending RevisionIssue(s): Punctuation~~~~~~~~~

SUGGESTIONS:-> Ad Text: Please remove the excessive or unnecessary punctuation fromthe following phrase(s): ""a terrific resource", "invaluable""

It's hard enough fitting your ad into 11 words without some illiterate criticising your perfectly valid punctuation! I wouldn't mind if they had criticised the irregular capitalisation of e-Learning, or the lack of an abbreviating stop after "Intro" ;-)

I suppose I can try changing the double quotes to single ones and see if they notice.....

"As If" analysis

2005-03-16T14:46:00.000Z

Yesterday I read on the comp.databases.olap newsgroup

"We've had a new requirement from our users where they would like toperform 'as-if' analysis on the data."

and in today's Independent

"To listen to what retailers are saying, it's amazing there haven't been more profit warnings."
Perhaps the two phenomena will combine.

We will see a rash of profits warnings and as usual these will be blamed on external events like:
The bad weather
The royal wedding (II)
The state of the housing market
....
We can all analyse the reasons given and say "as if!"

Can people have too much choice?

2005-03-14T12:37:00.000Z

All range planners should read this article !!!

Barry Schwartz - The Paradox of Choice - http://www.changethis.com/13.ParadoxOfChoice

Here's an excerpt:

"When people have no choice, life is almost unbearable. As the number of available choices increases, as it has in our consumer culture, the autonomy, control, and liberation this variety brings is powerful and positive. But as the number of choices keeps growing, negative aspects of having a multitude of options begin to appear. As the number of choices grows further, the negatives escalate until we become overloaded. At this point, choice no longer liberates, but debilitates. It might even be said to tyrannize."

How many of your options are duplicating something else in the range, or confusing your customers?

Cockney Chef in Assortment Planning Row

2005-03-12T00:40:00.000Z

"Jamie Oliver was so appalled by the state of school lunches that he decided to sort them out. But, he tells John Crace, it's not easy providing pukka tucker for 37p a head "

The Guardian

What has that got to do with merchandise planning then?

Well - it's interesting to see consumer selection in action isn't it. In this case it's small kids choosing rubbish to eat rather than green veggies. (and their parents feeding them MacDonalds through the bars in the school gates so they don't have to !!!)

I used to think Jamie was a real merchant banker until I discovered "Jamie's School Dinners" (and the Smirnoff helped too).

Now though, like every other middle class parent, I feel that he has become the saviour of my kids' health, and he is fast becoming a national treasure (Bless 'im). Bring on Sir Jamie!
But like most merchandisers selecting according to his own tastes and not being led by the market he is having a torrid time.

In this case I think (no, I know) that he is dead right. This "market" has to be wrong as nobody in their right mind would say that reconstituted rubbish with added chips is what our kids need for school lunch instead of a balanced meal, but it is what the market (The kids) want.
The dynamic is interesting though isn't it!

This programe shows us something that all range planners should take to heart. If you apply your own taste to the product you sell, rather than what your public want, then you are on a hiding to nothing unless your range is "enforced" by a very scary dinner lady!

Most of us don't have that kind of back up do we?

Giants battle for minnow

2005-03-10T17:05:00.000Z

"Oracle, SAP ... Retek? Giants battle for minnow

Oracle has responded to SAP's $US8.50 per share bid for retail software company Retek by jumping in with a $US9.00 per share cash counter offer."
The National Business Review

And the winner will be.....

We have no idea but the Googlefight looks like this ;-)

http://www.googlefight.com/index.php?lang=en_GB&word1=oracle&word2=sap

It doesn't matter how well you plan if....

2005-03-05T16:49:00.000Z

... the execution fails!

I wonder how quickly ASOS's merchandise plan reforecast alerted them to this problem..
(and I wonder what planning system they are using !!!)

Online fashion retailer Asos says discounts used to clear winter stock after warehousing problems will dilute full-year profits.

"Operating out of four warehouses has led to a delay in stock appearing on the website. As a result, we have had to heavily discount winter stock across January and February, which should have been selling at full price pre-Christmas."

The discounting has led to a significant increase in sales, and "as a consequence, we are bearing the costs associated with very high sales volumes but without the gross margin to support them." ASOS Chief Exec - Nick Robertson

Starting a blog

2005-03-01T16:41:00.000Z

How do you start a blog? Like this I suppose ;-)

I am going to ramble about the world of merchandise planning . I may also pass the odd acerbic comment on the related area of financial budgeting.
Stay awake at the back please!
So what happened today then?
Well we got some more consolidation in the industry. SAP just bought Retek for $494 million or $8.55 a share. According to Yahoo finance Retek's share price closed at $6.00 last Friday.
It is interesting to see the way in which the big companies just seem be eating up the smaller ones (Retek small?). Soon we will have one mammoth software company serving one huge retailer - Walmart or Tesco ;-)
And who is next on the takeover list?
Having seen Retek's stock price rise from 6.00 to 8.50 overnight I wouldn't mind knowing who is next in line!