As the retail industry continues to rapidly evolve, retailers, especially fashion retailers, find themselves facing a number of key challenges. Digitally empowered consumers have become more demanding, requiring more product information and faster fulfillment — all delivered within a positive customer experience. Competition from online retailers, in particular Amazon, is still rising and threatening to squeeze out brick and mortar stores and put pressure on online only retailers. All the while, retailers are still struggling to master non-linear, asynchronous digital supply chains, which are processing more products and more partnerships across more channels.
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In the digital economy, content is king, and for retailers, particularly in apparel and fashion, the dependence on high quality product information has never been more critical. This is driving savvy retailers to increasingly leverage the capabilities of data and technology to address these challenges as well as to connect with customers, anticipate market demand and distinguish themselves from the competition.
Among the retail trends developing in the apparel industry, there are some which stand out.
Amazon, the big disruptor
By the end of the decade, Amazon’s dominance in apparel is expected to increase three-fold, with the online retail giant owning nearly 20% of the total apparel market. This threatens traditional retailers not only in terms of lost market share, but also with regards to increased consumer expectations. Amazon’s fast delivery time, free shipping and flexible return policies are increasingly being seen as the new normal and creating challenges for retailers that struggle to keep up. Furthermore, many customers view Amazon as the “Google for product searches” creating direct competition for any online sale.
In addition to Amazon, fast fashion and discount retailers are changing the competitive landscape. By consistently offering the latest trends at low prices, fast fashion businesses, such as Zara or Forever21 have trained consumers to expect even shorter sales cycles at even lower prices. At the same time, discount retailers such as TJ Maxx and Ross are affecting the pricing hierarchy across the apparel vertical.
With so many options at their fingertips, consumers have grown more demanding
Given the possibilities of near-immediate fulfillment, and enhanced online experiences, customers have become more demanding. 80% are unwilling to wait more than 3-5 days for delivery and few customers are willing to pay for shipping. Providing instant gratification, (once the domain of bricks and mortar stores), has moved to the digital screen and onward to consumers’ front doors as customers look for immediate product availability in-store and online.
With information about products available across multiple touchpoints simultaneously, consumers also expect access to consistent product information across channels. According to a Google study, 88% of customers carry out research online before making a purchase. Product information through digital touchpoints impacts on 56% of in-store spending. From the point of view of the customer there are no separate channels, just one brand which is expected to be consistent at every touchpoint.
Read more: “Expressive, relevant and creative product information, rich with attributes, can be an invaluable tool for retailers to enhance product narratives and evoke emotional connections with consumers.”
Demand planning becomes more sophisticated
Short fashion lifecycles are another challenge for retailers. Powered by digital communication and social media, fashion trends come and go faster than ever. Retailers need ample inventory in order to allow customers to pick from a complete range of colors, styles and sizes, but miscalculating demand or buying too much of any style can result in wasted inventory.
The resulting larger product lines have added complexity to the demand planning process, making it necessary for retailers to become increasingly sophisticated in their forecasting. Retailers continue to use historical data to predict demand, but are starting to rely more heavily on other sources of information to strengthen their planning capabilities – for example, social media chatter, website usage and competitor websites. Accurately predicting consumer demand can have a tremendous impact on retail sales. For example, understanding consumer sentiment based on social media trends can help fashion retailers identify upcoming style trends and stock their stores with items consumers are most likely to want to buy.
According to McKinsey, one reason for this upsurge in data mining is that as recently as two years ago, the data simply didn’t exist. Combined with today’s increased computing power and the emergent capabilities of AI in spotting patterns before they are discernable to the human eye, retailers are moving to maximize data for demand prediction partly because they can.
Why retailers need MDM
An effective MDM solution manages data coming in from multiple sources – all non-transactional data that relates to the business and transforms it into usable, comprehensible sources of insight. Predicting future buying trends, for example, requires bringing together information about previous customer buying history, social media chatter, product and brand data and ratings and reviews from across multiple domains. With all the information ingested smoothly and gathered in a central MDM platform, enterprises can discover new insights that opens a window into anticipatory retail as well as share consistent and accurate information with both upstream and downstream channels.
With retailers today dealing with more brands, partners, suppliers and products than ever before, they are tasked with managing an unprecedented amount of data that flows in rapidly and is expected to reach multiple upstream touchpoints at a near instantaneous pace. Inconsistencies can creep in all too easily and become magnified in the blink of an eye. An MDM solution safeguards against this, ensuring that all product, vendor, customer and branding data is coordinated in one place.
Using a supporting Product Information Management (PIM) solution, online retailers are able to manage their eCommerce channels by creating rich product data that satisfies the customer’s need for deep descriptions that generate an emotional connection. PIM solutions speed up content creation while also ensuring accuracy and brand consistency. Data streams into the central PIM solution and is sent out again through organized syndication so that inconsistencies can easily be picked up and corrected. By giving departments a shared workbench for data exchange, content development and information deposition, the PIM solution overcomes the traditional data siloed environment and improves collaboration and inter-departmental communication. A more visible and transparent supply chain results in accurate and consistent product content.
Turning data into value
The many challenges that face apparel retailers today all share a common source: data. Riversand’s MDM and PIM solutions arm retailers with the tools to gather, manage, segment and understand data from all touchpoints. Riversand provides the capabilities to transform raw data into rich product information and meaningful customer insights, empowering apparel retailers to succeed in expanding their place in today’s highly competitive industry.