Merchandising: a Left-Brain Job or a Right-Brain Job?

 

Merchandising is a unique function only seen in retailing companies. Working at the core function of a whole organization, a merchandiser, or sometimes called a buyer,[1] takes on a critical role to ensure that the products are in the right quantity at the right price in the right place at the right time. This “4R” is never an easy task. Traditionally, it relied much on a merchandiser’s intuition and sense (as known as the “right-brain” skills) towards the marketplace. A successful merchandiser was said to be a “fortune-teller” with a natural gift of trend reading.

However, this idea is somehow obsolete. As the industry has evolved remarkably over the past 20 years, the merchandising role has developed as a consequence. In the 1990s, the planning part of merchandising showed its necessity, as stated in Professor Bell’s note for Harvard Business School. “For a retailer with hundreds of stores, the allocation process is a complex and laborious one. For this reason[,] a buyer may have an assistant (sometimes called a planner) to perform this role.”[2] A planner is described here as the supportive and supplemental role of a merchandiser. Since 2009, according to the book Apparel Merchandising: The Line Starts Here, “there has been a demise in the retail merchant role and the rise of the planning department.”[3] The planning role, unlike the conventional merchandising role, is heavily driven by objective analysis. This transformation is rather an outcome influenced by a number of factors. Because of the advanced product segmentation and channel diversification, the rigorous customer demands, and the increasing data availability, for a merchandiser nowadays, quantitative and analytical skills (usually referred to as the “left-brain” skills) overweigh the traditional intuition and sense.

The most conspicuous and undeniable difference between today and a few decades ago is that the products and channels that need to be considered in the buying process are much more complex. The marketplace used to be product-focused, which means that retail companies only need to worry about their own product lines and inventory, and plan the sales and allocation quantity independently. However, since it shifted into the customer-driven environment, one noticeable change has been that product types grow into tremendous varieties. Products are produced and ordered by silhouette, color, size, or even in a localized or personalized style. For instance, in a handbag company, a merchandiser previously was in charge of ten silhouettes and three colors, but now is faced with 20 silhouettes multiplied by eight colors in five different sizes, as well as three exclusive goods and two holiday season specialties. The same complexity is applied to the sales channel, as the overriding trend “omni-channel” further adds another dimension. Sales are processed not only at physical stores but also through online shopping, telephone communications, and social media platforms. It can be easily imagined that a normal human brain can no longer process such multifaceted information without mistakes. Therefore, merchandisers unavoidably rely increasingly more on functions and modelling to deal with such multi-dimensional categories.

What has become more complicated is not only the product or the channel but also the customer need; customers are demanding more speed, accuracy, and responsibility from a retail company. Speed is another buzz word for fashion, related to which we often hear words such as “Speed to market,” “Quick Response,” “See now buy now,” and so forth. As customers expect more frequent offerings—previously two seasons per year, currently four seasons per year or even changes on a monthly or weekly basis—merchandisers are required to be time sensitive season after season and speed their work routine several times faster, or in many cases simultaneously cope with multiple collections. As described in Apparel Merchandising, “merchandisers are confronted with seasonless seasons.”[4] Meanwhile, the customers are expecting great accuracy despite the high speed. A company without high-standard precision is prone to lose its credentials, and once it happens, there will be lasting damage that seriously impacts the overall performance. In addition to speed and accuracy, sustainability and corporate social responsibility (CSR) have also pushed merchandisers to consider their social roles when buying. Environmental impacts and worker safety are constantly monitored by external stakeholders. Kristina Baugher, a retail senior consultant, comments that “some customers care strongly about what materials go into the products they buy; others care more about where and how the products are produced. Merchandise planners need to take these concerns into account and translate them into the overall assortment strategy.”[5] Without logical planning and systematic control, it is nearly impossible for a merchandiser to meet all those customer needs effectively.

While product and customer are two inevitable components of retailing, the third factor that further complicates merchandising—the multitude of data—is not a traditional element. Inside a company, historical sales data has accumulated to a large enough quantity to be analyzed, and gradually plays a critical role in the decision-making process. As a merchandiser, to decide what products and how many products should be ordered, where the price points should be set at, and when the shipments should be sent, a great amount of reports need to be read and analyzed first.[6] On the other hand, external data can also be overwhelming. Trend forecasting, macro-environment analysis (such as economy, politics, weather, and so forth), and competitor benchmarking are all categorized into the realm of data analysis. A merchandiser must own the skill of data consolidation and information integration.

To conclude, in order to respond to the upsurge of product and channel varieties, the increase of customer demands, and the explosion of internal and external data, intuition and sense play a less important role in a merchandiser’s skillset; instead, analytical and quantitative capabilities are explicitly becoming decisive in this job and vital to success. Indeed, as pointed out by Andrew Kahn, Chairman of Kahn Lucas Lancaster, Inc., “decisions are based more on fact than on gut. Merchandisers are becoming technicians rather than mere creators.”[7] Here appears another question: what will this job become in another 20 years? Will it be replaced by computers, which are apparently much more adept at “left-brain” skills than human beings? Probably not. Because the retail industry is changing constantly and unpredictably, even the outstanding programmers will hesitate if asked to develop an automatic program that deals with all the variables and incorporates the new changes every few minutes.

 

[1] Definitions may vary in the context of a brand or a retailer, but in this article, these two words are used interchangeably.

[2] David E. Bell, “Note on Retail Organization,” Harvard Business School No. 9-595-009 (Boston: Harvard Business School Publishing, 1994), 2.

[3] Jeremy A. Rosenau and David L. Wilson, Apparel Merchandising: The Line Starts Here, (New York: Fairchild Books, 2014), 37.

[4] Rosenau and Wilson, Apparel Merchandising, 117.

[5] Kristina Baugher, “7 Trends Impacting Merchandise Planning Today,” Viewpoints on Innovation, May 18, 2016, accessed February 11, 2017, http://viewpoints.io/entry/7-trends-impacting-merchandise-planning-today.

[6] Rosenau and Wilson, Apparel Merchandising, 37.

[7] Ibid., 39.

Bibliography

Baugher, Kristina. “7 Trends Impacting Merchandise Planning Today.” Viewpoints on Innovation. May 18, 2016. Accessed February 11, 2017. http://viewpoints.io/entry/7-trends-impacting-merchandise-planning-today.

Bell, David E. “Note on Retail Organization.” Harvard Business School No. 9-595-009. Boston: Harvard Business School Publishing, 1994.

Rosenau, Jeremy A., and David L. Wilson. Apparel Merchandising: The Line Starts Here. New York: Fairchild Books, 2014.

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