Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research's weekly analysis on emerging issues facing retailers, presented here for discussion.
There's some good news in our annual merchandising benchmark report, but digging beneath the surface, it's not all sunshine and birds.
When given a laundry list of automated tools and techniques they believe are critical to their retailing success, most survey respondents identified all of them as at least "somewhat important."
Theoretically, people like me, who came out of the IT side of the retail house, should be rejoicing at the new acknowledgement of the value of science. We've waited a long time for a "changing of the guard" from old-line merchants who relied on gut feel and would toss off most computer assists as irrelevant.
But there's a problem. For virtually all modern tools and techniques with the exception of forecasting, retailers didn't say they have a solid understanding. Rather they selected "familiar with the concept" to describe their depth of knowledge regarding tools and techniques. Houston, we have a problem.
I call this phenomenon "Magic Bullet Syndrome" and we see it a lot in our benchmark studies — passion without understanding.
The danger of placing a disproportionate belief in the value of technology without fully understanding it is two-fold:
We have plenty of data to support the dashed expectations problem. Laggards often report new technologies have not delivered promised benefits. Of course, that leads us to always wonder whether they had inflated expectations. That's why I call it a magic bullet. It is the belief that technology can turn around a failed product mix.
I don't have a lot of hard data about the second part beyond the obvious — customers have cut their purchases of apparel and other broadlines. When the latest electronic gadget is sexier than the latest outfit arriving at a store near you, you know the industry has a problem. Deborah Weinswig, Citi's broadlines retail analyst, believes that's a big part of the reason her coverage area sales have been depressed. Consumers are spending on cars, homes and associated projects and electronics (her "C.H.E.A.P." consumer concept) more than they are on things they will wear because there's not a lot of freshness out there to grab their interest.
And to be really clear, it's not just about fashion. My once favorite grocer just did a remodel that made the aisles wider, but also reduced the amount of inventory in the store by more than 15 percent. Where the heck did the mint chocolate chip ice cream go? What were those merchants thinking?
Obviously I'm a proponent of applying science to merchandising. Still, if you ask our clients, they will tell you they know they'll never supplant the art of picking the right product — the "eye."
How much are retailers relying on technology and marketing more than merchandising to drive sales?