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Future Retail View: Optimising product life cycles, from planning to replenishment

By Miya Knights, Publisher | Friday June 28 2024 | UPDATED 28.06.24

Retail Technology interviews Danielle Tan, Marketing Business Unit Lead for Planning, Pricing and Inventory Solutions at Centric Software, on the growing need for end-to-end product lifecycle management

Planners, buyers and merchandisers are embracing the latest modern software to turbocharge their business processes and compete effectively in rapidly evolving markets.

Danielle Tan, Marketing Business Unit Lead, Planning, Pricing, and Inventory Solutions at Centric Software, says brands and retailers are adapting to digitally-driven shopping habits and are looking for technology that can automate and optimise the complete inventory decision-making process, from analysis to end-of-cycle and stock clearance.

Tan told that recent research published by Gartner found approximately 40% of retailers and brands still manage demand-planning (forecasting) using fragmented and person-centric processes.

Another Gartner study on retail management highlighted 25% of organisations have no dedicated retail management system that can help centralise operations, such as ecommerce management, order management, returns management, inventory management, and reporting and analytics in place. A further 12% still rely on manual processes, which leads to intensive, inefficient and error-prone spreadsheet-based ways of working.

“Everyone wants and expects convenience,” said Tan. “Everyone expects you, as a retailer or brand, to offer relevant products at low prices and still deliver excellent customer experiences. But the reality is that real-time fashion is a challenge, with many siloed, disparate systems that don’t often align or communicate with each other.”

Happy buyers, happy customers

As retailers and brands look to recruit and retain the best talent to develop products and assortments that meet and exceed modern consumer expectations, reliance on outdated processes and systems prevent them from adopting modern merchandising best practices.

Besides inaccuracies and a lack of real-time access and updates, manually managing end-to-end retail planning and execution processes, from product concept to seasonal planning and analysis and shelf replenishment through to end-of-cycle markdowns, can dramatically impact the bottom line.

“It means that your business isn’t aligned,” Tan explained. “Your financials won’t align with your demand forecast or actual sales plan, and you’ll most likely end up with both stockouts and excess inventory everywhere. If the data is a mess, how do you then get real insights that reflect your actual business?”

In addition to developing and selling more popular products that boost sales, optimising end-to-end practices and insights enables businesses to reduce waste. For example, the European Environment Agency (EEA) said that the average share of unsold textile products is 21%.

Sustainable business practices

As online demand surged during the COVID-19 pandemic, another growing issue is online returns, which is putting even more pressure on retailers and brands to better match supply to demand. Last year’s return rate in the US amounted to 14.5% of sales.

Tan said developing products, planning assortments and even optimising pricing for maximum sell-through is evermore challenging in such an increasingly complex omnichannel world. The EEA also noted that around one-fifth of the 21% of unsold stocks are destroyed.

“Some of the problems we solve at Centric are the overbuying and out-of-control product costs that can impact product margins and increase waste,” Tan added. “Heavy discounting to clear stock simply eats away at retailers’ profits and makes it difficult for them to hit sustainability targets if excess stock is destroyed.”

In response, Centric has expanded beyond its traditional PLM product design, development and sourcing capabilities. The software provider has added end-to-end retail Planning, Market Intelligence (formerly StyleSage), and Pricing & Inventory (formerly aifora) solutions to ensure the right product, in the right place at the right time, and maximise margins by optimising inventory, pricing, discounting and promotional strategies, and product mixes.

Advanced AI-powered real-time retailing 

Tan said that a centralised platform, which includes planning and pricing alongside PLM, supercharges design and production and reduces errors and task redundancies. She also pointed to the advances in using artificial intelligence (AI) based automation and insight.

“That’s where AI and automation can help,” she said. “And that’s really why our technology should be seen as an enabler, to help automate the grunt work and, at the same time, provide you with both the bigger picture and the insights you need to make informed, data-driven business decisions. Enabling merchandisers to focus on driving their business forward. This is what we mean when we talk about real-time retailing.

“It’s helping retailers and brands to be more responsive and get their products to market faster by being more accurate and ensuring the assortments reflect and anticipate what the consumer wants while aligning with the brand or retailer’s ethos and values.”

Taking on the strategic challenges faced by the industry today, Centric has been developing its roadmap to provide every stakeholder in the product life cycle with one single, accurate source of truth for forecasting, benchmarking and analysis.

Data-driven decision making

“Traditionally, merchandisers generate demand forecasts based on historical events,” Tan added. “Our solutions help them to shift from a reactive to a proactive approach across all sales channels, including physical stores, ecommerce, DTC (direct to consumer) and B2B (business to business).

“Centric solutions help manage and distribute all of the relevant data to support data-driven decision making, such as aligning the demand forecast with the sales forecast so that, when it comes to the end of the season, you don’t have to focus on mass markdowns.”

Guess, a global lifestyle brand with over 1,600 retail stores worldwide offering apparel and accessories for men, women, and children, is one of more than 18000+ brands working with Centric. Using Centric Planning, the brand emerged stronger from the COVID-19 pandemic.

Daniel Botey, Vice President, Global Inventory Management at Guess Europe Sagl, stated: “We had a 5.6% operating margin at the end of fiscal year 2020. We closed this past year at 12%. We could not have done it if we had had a lot of inventory. Centric Planning has enabled us to truly follow our strategy and increase our profitability in a very, very big way.”

[This interview was conducted for a sponsored article.]

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