Why Enhancing Forecasting, Scenario Planning Is imperative Now
The pandemic has dealt a blow to every industry, and fashion is certainly no exception. Brands worldwide have been forced to close stores, furlough employees and absorb the impact of canceled orders and a disrupted supply chain. News that the fashion weeks of London, Milan and Paris are going ahead this fall — albeit with strict social-distancing measures in place — provided some much-needed relief, but the picture will change quickly in the event of a second wave of the virus.
The experience of buying clothes in store — key to the ongoing success of fashion brands despite the rise of discount competitors online — has also been undermined by the crisis. Not only are consumers fearful for their health while visiting stores, as explored in recent Accenture research, but local restrictions may limit their ability to touch or try on garments. They may have to wait in line for long periods before being permitted entry and, once inside, need to be mindful of others’ personal space at all times. It’s a far cry from the “retail therapy” of old.
As fashion brands respond to the new reality, as they consider where to reopen stores and how to manage the customer experience within them, they have no playbook to draw upon. Moreover, the complexity of a population-wide health crisis — which varies in magnitude by country, state, county and city — makes it extremely difficult to carry out scenario planning, risk mitigation and rapid decision-making. There is no one-size-fits-all when managing a network of stores on a national level.
With these challenges in mind, it would be fair to say that the industry has never been in greater need of timely, accurate and responsive demand monitoring and forecasting. To weather the months ahead, and even come out of the crisis stronger than they went in, retailers need to be able to model the trajectory of the pandemic’s impact on a store-by-store basis. In so doing, they can anticipate shifts in demand and decide what to do about matching demand with inventory and what to do with their store operations; hours of operations, providing curbside pickup, store delivery to home or even which ones to close completely.
Enhancing the business’ forecasting capabilities, in the middle of an unfolding economic emergency, is a bold move. Retailers that do so can grow market share at a time when many of their rivals are struggling to stay in business.
How? In our view, the first step should be to ramp up analytics activity and derive more insight from new sources of external data. This will help retailers answer three essential questions: How are our key locations holding up? Which consumer trends should we be watching out for? And how do we become future-ready?
How are our key locations holding up?
Forecasts and scenario planning models are only as good as the data that is fed into them. In extraordinary times, it makes sense to introduce new demand signals into the analysis, combining these where possible with internal sales and spending trend data.
Retailers and brands would benefit from models that show them how the virus is playing out in each of its key locations, whether there is a potential for a resurgence of cases, and what the local ordinances are as well as the extent to which the population adheres to such regulations. Other variables to track would be economic reports on employment, reporting of movement tracking, and sentiment analysis derived from social media. Put together, these signals illustrate the drivers influencing consumer behavior and outline the implications for market demand.
Which consumer trends should we be watching out for?
As they develop a stronger understanding of each region’s strategic and operational situation, informed by new data sources, retailers can develop new analytic models to inform smarter decision-making and robust scenario planning.
Innovative planning models help retailers decide how best to respond and what levers to pull with their staffing, inventory and store openings to satisfy consumer demand in each location. In doing so, retailers can also make a call on tough decisions, such as whether individual stores would be better repurposed into dark stores to support curbside or local delivery, or what inventory is needed to satisfy the most important customers.
How do we become future-ready?
Even in the midst of an unprecedented global crisis, there is opportunity for growth. Brands that uncover new insight and develop smarter plans for the future are in a particularly strong position. But this is not enough. Unless retailers also have the operational agility required to take action and adjust strategies and operations, their new insight will be of little use.
The priority is to align cross-functional capabilities, ensuring the business can pivot strategies and operations as required. We believe that the core functional areas within the firm should be aligned and evaluated, based on a clearer understanding of future demand: Merchandising, marketing, planning, inventory, supply chain, and store operations.
Conclusion: Welcome to a brave post-pandemic world
Fashion is all about spotting new trends and satisfying customer demand. For good reason, leading brands were already developing their ability to monitor and predict changing preferences. To seize a competitive advantage, they were taking action armed with new insight. Today, this principle has become even more important. Survival as a business depends on timely and ongoing access to local information.
As the pandemic comes under control and consumer behavior undergoes its next shift, future-ready fashion brands can thrive whatever happens. For those that weather the storm, the current moment could even be seen as a great opportunity for enabling change, especially when it comes to addressing concerns about climate change and growing interest in the circular economy. By tracking changing demand, they can shift to a more sustainable business — creating fewer unwanted goods; operating with a smaller footprint — without compromising their business success. The new world belongs to them.
Jill Standish is senior managing director and head of Accenture’s global retail practice.
For more retail business news, see:
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Social Movements, Economic Inequality Spotlight Need for Policy Change
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