Terry Lundgren, CEO of Macy's, recently put forth a call to action to the manufacturing community called My Macy's. Along with combining multiple divisions down to one, the principle behind the announcement is to improve productivity at store level and aid the buyer in finding opportunities. Finding a way to make each individual door location more productive requires a great deal of time, skill and the right tools. Conducting retail analysis at store level may seem like a daunting task. It also provides an enormous opportunity.
Many manufacturers are already familiar with this concept, especially those who service Wal-Mart. The buyer can’t possibly optimize every single sku at every single store- they just don’t have the resources to do it. If each manufacturer optimizes his or her piece of the pie, both retailer and manufacturer win. Yet most manufacturers' core competency is design and sourcing - not retail analytics.
So here are some tips to help capitalize on this opportunity:
1. Instead of only tracking sales and inventory at the style level, track by sku's by store. If your line is sku intensive, perhaps focus on the key sku’s. Or focus on items in the first few weeks of selling. Note stores that are sold out, or that have inventory and haven’t registered a sale. Determine which stores should have more inventory and those that should have less. Provide a recap to the buyer along with the corresponding detailed data that they can take action on. Increasing sales and reducing markdowns will improve your profitability as well.
2. Over time, develop lists of your top selling stores. Your analysis may reveal that the same group of stores perform similarly based on certain product attributes (e.g.:silhouette, color, size). You can do a similar analysis tying U.S. Census bureau demographic data to store locations to help the buyer target the right product to the right stores. Both of these tasks are also good ways to suggest tests as they reduce the buyer's risk.
3. If the buyer has not provided a weekly sales and inventory plan (along with profitability), develop one yourself. Tracking your key items weekly and monitoring their profitability will also aid in prioritizing which items you study at store level in more detail.
4. While moving to a centralized model brings with it great efficiencies, certain geographic opportunities may go unrealized by the buyer. They will be looking to streamline assortments so you may have to prove a case that an item that performed very well in one division is right for all divisions (or some other subset of stores).
5. If retail analysis is not a core competency in your organization, you may need additional skilled personnel, consulting or software tools to help you do the job. To do everything we are recommending here, you will need door level sales and inventory data. This is available via the EDI 852 document (Note to the uninitiated: There may be associated costs with this document and parsing it is not for the faint hearted).
6. Consider enlisting in store merchandisers to ensure your products are properly presented at store level. Several organizations including Market Connect Group provide this valuable service.
If you haven't figured it out yet, we're recommending you do the buyer's job. Not just because Macy's wants you to do it, but because the return on investment for you can be significant. Turn it into your competitive advantage, and become the buyer's "trusted advisor" in your category before your competitor does. I would be happy to discuss this opportunity in more depth - Please call or email me if interested.
Jim Lewis
Founder and CEO
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