Marco Ruffa, Digital Transformation Director of Pinko, shared the brand’s journey with AI-driven retail merchandising solutions and their collaboration with Nextail. Speaking at the e-P Summit, Ruffa highlighted how these innovations led to outcomes such as 10% fewer lost sales.
Pinko’s unique challenges managing inventory and distribution across a global network
Pinko, a premium fashion brand specializing in apparel, handbags, other accessories, and shoes, closed last year with a turnover of 290 million euros, of which 50% came from their store portfolio, and credit a large part of this success to the hard work which has been invested into transforming core merchandising processes through advanced retail technology such as AI-driven merchandising solutions.
On stage at e-P Summit, Ruffa gave a sense of the complexity Pinko faces when managing product distribution and optimizing sales for a brand with approximately 2,000 different items across 280 stores worldwide. This natural operational complexity, he explained, is further exacerbated by today’s industry disruption and changing consumer demand.
Priding itself on delivering collections that are unique, eclectic and, and original, Pinko partnered with Nextail in mid-2020 to leverage highly-granular demand forecasting to predict which products will be in demand across channels and locations in order to best meet customer demand through curated assortments.
Pinko turns to AI-driven merchandising solutions for higher full-price sales and fewer lost sales opportunities
After implementing Nextail solutions, Pinko was able to optimize and balance inventory across the various channels they manage, including physical stores, outlets, and the web. According to Ruffa, by quickly understanding which products sell out quickly in stores and replenish them, Pinko has seen a 10% reduction in lost sales.
Additionally, Pinko is able to create scenarios to identify products that are likely to remain unsold across its stores. By anticipating this outcome, Pinko’s team proactively redirects these products to outlets, where the discounts applied can be less than what would typically be offered in a store. This approach allows Pinko to optimize sales and minimize leftovers, ultimately enhancing profitability.
Similarly, Pinko can best understand what products must be included in replenishments, which has allowed them to reduce timescales and actually increase the number of times they can replenish stores in order to make sure assortments in stores are always on point. Ruffa said that by leveraging AI’s predictive capabilities, they can efficiently identify products that are less likely to sell in a particular store and relocate them to a more lucrative location, all while optimizing logistical costs. This approach has allowed receiving stores to increase sales by 10 percentage points.
What’s more, Ruffa explained that previously the team would have had to do all of this through Excel, which even when working with an advanced spreadsheet, was still quite manual and required a team of four or five people, and yet calculations would still always be somewhat limited.
With the help of AI, Pinko teams can run simulations continuously, freeing up the team from manual work and enabling them to concentrate on other value-added tasks, the real “icing on the cake” activities unlocked by AI, such as analyzing purchasing behavior.
How Pinko overcame resistance to change and increased trust in advanced algorithms
Ruffa also discussed the challenges of introducing transformational technology such as AI, as there is a tendency to be resistant to change, especially when it differs from established ways of working and requires placing trust in a “machine”. But trust is critical to the success of technologies like AI and advanced analytics, particularly when working with large sets of data.
To address this, Ruffa said that Pinko approached the topic of AI in a way that is more understandable in order to include as many people as possible in the conversation. Teams carried out several tests related to their merchandising-related work and were able to prove that AI outperforms human capabilities and subjectivity in terms of processing and analyzing a broad range of information.
Once teams were able to see this and understand how it makes their processes more efficient and effective, they became excited about the fact that they can concentrate on introducing new ideas.
Pinko makes better use of resources and promotes sustainability with Nextail
Ruffa explained that Pinko is also committed to sustainability and reducing waste in its operations. By using Nextail to make more informed decisions around inventory management, they can more accurately predict demand and optimize inventory levels to reduce the amount of stock that goes unsold, minimizing waste and improving its sustainability.
Overall, Pinko’s use of Nextail AI and commitment to sustainability demonstrate the company’s dedication to innovation and responsible business practices. By leveraging technology and taking a proactive approach to reducing waste, Pinko is able to improve its bottom line while also contributing to a more sustainable future.
Looking to embed AI-driven efficiency into your core merchandising processes? Contact us to learn more about how Nextail solutions will completely transform your retail business!
