By Sahir Anand, Aberdeen Group
Two questions haunt merchandising, finance, and retail technology executives today. First, does the traditional "one-size-fits-all" (i.e. common and similar store or channel merchandise sets) merchandising strategy still result in sufficient levels of inventory sell-through, profitability, and timely replenishment? Second, are current merchandise life cycle business processes and systems enough to increase customer demand?
Aberdeen's research suggests that traditional strategies must evolve if the stores that employ them want to survive. Retailers are under increasing pressure to maximize gross margin and inventory turns. Ignoring store and channel merchandising inadequacies (with symptoms such as growing customer dissonance, high markdowns as a result of low full-price sales, and declining profitability) can lead to store failure and shutdowns. Shrinking margins and slowing inventory turns are a sign that a store is losing touch with its customers — and when that happens, disaster is not far behind.