Retailers know that wholesale is an imperfect process – but in an era of in depth and real time customer data, isn’t it time it became a better process?
Global market choice
In an increasingly global market, the traditional retail wholesale model has become ever more challenging due to the sheer number of compelling brands on offer. Merchandisers have always been constrained by the logistics of the buy in advance model and limited warehouse size to purchase just a fraction of each brand’s range. Now, with so many brands attaining global reach, the decision making process has become ever more challenging.
Should the retailer continually build more of its own warehouses? Should it add brands but reduce the number of products from each? Can this subjective subset of a brand’s range really provide customers with a true picture of that brand’s value and appeal? What is the likelihood of including any of the brand’s top selling products in a limited selection?
Brands and retailers continue to look for ways to collaborate more efficiently in order to improve the quality of the overall customer offer. While more accurate stock files have helped, it is those retailers that embrace real time access to brands’ warehouses and live data that will change the game. – from backfilling the wholesale buy to address size fragmentation, to offering customers an extended range of the right products.
By using the technologies and data available to backfill the wholesale buy, retailers can address size fragmentation and present customers with, not only the subjective wholesale buy, but also a far broader range of items from each brand. As a result, the retailer gains a deeper understanding of its specific customer demographic and preference, which radically improves long-term accuracy.. This real time information about the brand’s overall sales, for example Top 10, 20 or 100 products, can then allow a retailer to further understand performance within the wider market context.
This information can, of course, also be used in real time to improve the immediate customer offer, driving up sales and expanding customer choice; but it also has considerable long term value. Providing buyers and merchandisers with an understanding of customers’ purchase habits across both wholesale and non-wholesale products delivers far more insight into customer preference. This learning enables retailers to understand how best to explore the new model – from the impact on wholesale products of offering new products online to using proven customer preference to improve the accuracy and relevance of the wholesale buy year on year.
This understanding can clearly drive up value for brands and retailers alike. The retailer will no longer be judging the success of each brand based on the subjective and limited subset of products purchased exclusively through the wholesale model. Instead, with tangible customer response to a far broader product range, it will have evidence of how that brand could perform for its specific customer base and which aspects of the product range would be most likely to succeed next season.
Those retailers that have already begun to explore this insight have typically increased the wholesale buy, resulting in a sales increase of up to 50% next season. They have also, critically, improved the quality and depth of the product mix to increase the number of top selling products included, providing customers with those top rated products from day one. Essentially, better customer understanding drives more sales – increasing revenue and profitability whilst also improving the customer offer year after year. For all the transience of the fashion market, knowing the customer is key to improving the quality and accuracy of the wholesale buy for each incremental season. By leveraging the insight delivered by presenting customers with broader exposure to each brand, a retailer can step away from the constraints of managing an ever expanding range of global brands and buy with confidence. The wholesale process may be imperfect, but by adding in depth customer understanding it can certainly become far more accurate and profitable, for brands and retailers alike.
By Chris Griffin, CEO, Anatwine