A changing role for today’s brands
For decades, category captains have played a large role in retail merchandising decisions, including making assortment and inventory management recommendations. That dynamic seems to be changing now that retailers are ramping up their own efforts to use data. As retailers invest in data and analytics to introduce their own data-driven improvements, brands must also step up their game if they hope to influence how their products are carried in stores and online.
Vague, high-level recommendations simply won’t suffice, nor will those with flimsy backing. Retailers will only pay attention to those brands with precise, actionable proposals based on rigorous data analysis. If you want an audience with your retail buyers and replenishment managers, you must arrive with better data-driven insights than they can get independently.
Brands who lack those insights will remain tied to the plans retailers make without them… which can harm both the brands and the retailers themselves. Because of the variety of what they sell, retailers can rarely concentrate on the specifics of a single brand’s products. Greg, who once managed 4,000 SKUs in 700 stores, describes his experience:
“A retailer can’t focus enough on any vendor’s particular product line, because among 4,000 SKUs, we might have a thousand vendors.”
Instead, they rely on forecasting and ordering algorithms to decide what and how much to buy. But those algorithms can have disastrous consequences for manufacturers if left unchecked.
In a catastrophic example of a self-fulfilling prophecy, if an item goes out of stock, sales may be lower than true demand; the algorithms then place orders based on these artificially lower sales, which lead to more out-of-stocks and further depressed sales for a product that could perform much better.