Best PracticeData ScienceDemand Forecasting


Jan 4 2023 ...

Data is key to forward-looking retail approaches and winning with customers | Columbus Consulting Interview

From tailored assortments that unlock sales opportunities, to sustainability options that customers will love, for Columbus Consulting Partner Charlotte Kula-Przezwanski, drawing on the right data to understand demand is key.

Columbus Consulting Partner and Director of EMEA, Charlotte Kula-Przezwanski, has over 25 years of deep experience in retail and IT, and has guided retailers through their process definition and solution implementation journeys.

In this Q&A with Nextail, Kula-Przezwanski talks about how retailers big and small, want to make sure their customer is at the heart of everything they do, but might not be drawing on the right data to do so. She talks about how taking a forward-looking approach, instead of looking to the past, can create everything from assortments to sustainability options that customers will love.

See more insights from “The Big Debate” roundtable of experts including Gita North, Partner at First Friday, and more.

How will retail look in 3-years’ time and how will it differ?

Today, retailers who are balanced between retail and online are better placed to weather the storm.

In the past, if you were omni-channel, your e-commerce percentage might have made up around 10% now it’s more like 20-30%. British retailer Next, for one, is about to hit over 50%, so they’re going to be more e-commerce than they are a store.

Pure play retailers are also dabbling in the physical world’, from opening stores, or at least pop-ups, in order to have a physical entity because there’s such a huge opportunity to talk to customers.

And as this evolution continues, stores as we know them will change to become destinations, featuring book shops, coffee shops, restaurants, and more, essentially “third places”. To get people back out shopping, you’ve got to give them some other things that they like doing.

Then there are new routes to market. Marketplaces are gaining in popularity for retail brands as the cost of acquiring and retaining visitors at an online store is becoming increasingly expensive. A retailer might want to go on a marketplace and may give away 30% of their margin to do so. But the fact they can acquire so many more customers than they ever could just from their own website is worth it. So we will see more of this in the near future.

As retailers continue to morph and evolve, what changes will they need to make to future proof them for 2025?

Retailers have to put the customer at the heart of everything they do, because customers want retailers to know and understand them. And that’s around customer service, customer experience, personalization, the fulfillment side, making sure you’re really on the money. Otherwise, it’s three strikes and you’re out, and actually, if a customer has a bad experience, it might just be one strike.

But as retailers grow in size, sometimes it’s easy to lose sight of what you did really well when you were smaller and when you were closer to your customer and knew what they wanted, but it doesn’t have to be that way if you’re looking at the right data.

The issue is that a lot of traditional merchandising teams are naturally risk averse and tend to want to look at the hindsight and de-risk it. So they think about sales history when determining a stock package and then spread it across the channel however they can without focusing on where the demand might be which is just a self-fulfilling prophecy. All of the recent disruptions have shown us that you can’t just use your historical data and hope customers will shop or come back – hope that they behave as they’ve done in the past.

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Businesses that are really starting to transform are taking a very different proposition by thinking about the demand plan and what that means from a supply chain perspective – at least to get this semblance of a customer demand first, a forecast.

Retailers can be reticent on demand forecasting tools and can struggle to trust the forecast. But it’s about the accuracy of the forecast. And I think that’s key in the delivery of the solution. If you get users to map out what they would have sent or what they think the sales are and then what the forecast engine said it was going to be and that the sales actually came off, then they start trusting it and believing more in an engine. And this change in mindset is key to future proofing.

Read about the different types of data Nextail uses to forecast demand.

How and where do you see technology playing a role in retail transformation?

Technology can play a key role in unifying inventory, which is becoming increasingly important for omnichannel fulfillment, in addition to demand forecasting. By joining up data from all channels to one central place, you can use machine learning to gain insights like real-time visibility of inventory across channels to tailor individual store assortments to unlock new sales opportunities.

Imagine a lingerie retailer that offers a multitude of bra sizes. In the past, there would be no way to link the size profile they would send to a store with the size profile of the consumers living near it. Now with rich e-commerce data, for example, retailers have a better idea of consumers living within 10 miles of a particular store and thus what sizes to send. It might be quite different from what’s been sent historically.

Or maybe there are certain products that you never thought would sell in a particular store. But actually, when you look at the e-comm data, people have been buying them from you, they just haven’t come into the store. So you’ve missed an opportunity to sell to them. And actually, if you change the store assortment and people then search for something like “red dress near me” in that store, you’re going to get more people coming in. Because a part of shopping today is about entertainment, while the other part is about convenience.

Retailers could also use Geo Mapping techniques to deliver location-based offers. The hospitality industry has been using Geo Mapping for a long time, so why not do the same in retail, saying “oh, I see you’re a Marks & Spencer customer. You’ve tended to buy this from us. I see that you’re near the store. Why don’t I offer you some promotions to come in?”.

Google data can also enable retailers to better understand customer demand to the extent that they might reconsider running a sale or a promotion when shoppers are actually interested in looking at products within a given category and would buy at full price.

In stores themselves, technology will also increasingly be deployed in stores to reduce friction points such as at the checkout in order to speed customer journeys and make the shopping experience easier and more convenient.

There have been many unexpected disruptions over the last few years. How do you see this changing the priorities of retailers moving forward?

I see a few trends in this area, the first two related to the supply chain.

Firstly, retailers are looking to shorten lead times. Pre-COVID, you didn’t have to worry as much about when deliveries would arrive – there was maybe a 2-week margin of error on either side. Now, you don’t know when things are on a boat, the cost of the boat, how to get things out of a port, etc. So retailers are looking to shorten lead times. Whether it’s an urban myth or not, many people I’ve spoken to have mentioned that one leading global retailer is finishing the product on the boat as it comes over so that it’s not wasted downtime.

Secondly, retailers are becoming vertical again to be able to react more quickly to industry trends. And actually, another large global retailer has now moved 30% of their production home and to a neighboring country and they own the factories because what they want is agility. They don’t want to have to book the whole range nine to 10 months in advance, hoping that it’s going to sell. They want things a lot closer to home.

Finally, and related to putting the customer first, is sustainability.

We’re seeing that younger customers especially are concerned with sustainability in retail, with many being unwilling to shop from certain retailers due to perceived irresponsibility in relation to the environment.

What I see as the very first step towards becoming more sustainable in retail is through more efficient operations, namely accurate planning and forecasting. Essentially, the less waste you create in the first place, the less of it there will be to dispose of later. So for example, if you can ensure that the right products reach the right audiences at the right time, you can reduce things like in-season transfers and transportation and product destruction and disposal at the end of the season.

Additionally, retailers will need to have some sort of circularity for customers who like their brands, and that’s a very near-term thing. For example, if you’re a brand that’s very occasion-oriented, why not offer rentals? Several fashion giants, including the likes of Zara and H&M, have launched these types of rental or reuse initiatives.

Retailers could also demonstrate their sustainability credentials by incorporating pre-loved and reused products in their assortment planning. This would appeal to younger shoppers, who like to buy better but buy less.

Changes in customer perceptions and terminology add to the retail potential – what was once described as “second-hand” or “charity” is now “pre-loved”, “vintage” and “cool”.

More insights from “The Big Debate” roundtable of experts including Javier Figar, former CRO of AWWG; Carlos Abellán, Data Analytics & Transformation Director at TENDAM, and others.