Posted Date: 

Customer-Driven Decisions

By  Terry J. Donofrio
Social media has changed the way today’s retailers interact with, and understand, their customers. With a combination of social media and internal support tools, retailers can gain access to additional customer-specific information to support some of their most basic and important retail processes: merchandise strategy, merchandise plan, assortment plan and allocation/replenishment functions.

• Senior management will consider customer feedback as they set the company goals and define a merchandise strategy;
• Planners will consider customer input and trends as they analyze past performance and develop new sales and profitability plans for the future season;
• Buyers will consider the customer reaction to past merchandise offerings as they define the new assortment; and
• Allocators will consider store-based customer input as they update allocation methods and procedures

In-Season and Post Mortem Analysis
As in-season results become available, plan versus actual results can be monitored, analyzed and used as new forecasts are developed. These outputs can be coordinated with social media inputs to determine the reasons behind positive or negative results and thereby affect the new forecasts.
Most companies conduct a post-mortem analysis at the end of each season to determine the success of their merchandise approach and the plan. Social media can provide good input to this analysis based on the customer’s reaction to the products, pricing, vendor programs, assortment breadth and depth, events and promotions.

Sophisticated software tools have been developed to consider the following:

• Gathering and Processing Social Media and Internal Inputs: Collecting and organizing the diverse data types into meaningful measures and metrics; providing information to planning and merchandising; applying trends to update forecasts, plans and store clusters; providing information to e-commerce and catalog channels.
• Applying Analytics to Social Media Information: Providing advanced methods to help categorize the various types of social media; scientifically developing metrics and measures; providing predictive modeling and data mining to develop statistically based forecasts, trends and inferences about customer behavior; helping build dashboards and alerts.

Key steps for processing social media include: Collect information; monitor and analyze; process the data; develop categories; define measures and metrics; maintain the database; develop dashboards/alerts; provide analytics/data mining/statistical methods; interface to business processes and other tools (e.g. CRM); develop reporting methods.

While engaging customers through social media is a worthwhile objective, the real benefit to the retailer’s business will only be achieved when actionable information is made available and utilized within the appropriate business processes.  To provide the maximum benefit to the merchandising effort, social media information must be integrated with the merchandise strategy, the merchandise plan, the assortment definition as well as the resultant buying decisions.

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Terry J. Donofrio, president of Retail Systems and Services (RS&S), has served the retail industry as a consultant, trainer, lecturer and systems specialist for over 25 years. A specialist in advanced merchandise planning, he has worked with various discount, department and specialty chains in the U.S. and internationally to help develop and implement their planning processes, organization and system support.