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What Will the “Merchant of the Future” Look Like?

Retailers are becoming increasingly digital businesses—and the merchants who power the merchandising organizations will see their roles evolve accordingly, with automation playing a bigger part in the day-to-day.

McKinsey laid out its vision for what the merchant of the future could look like, expecting to see a greater focus on critical thinking and problem solving as myriad mundane tasks are taken over by software and automation. Instead of reactive replenishment, merchants will take a more predictive and proactive role in managing stock levels, using tools like algorithms and decision models to make informed choices that will keep opportunity costs down. Aided by predictive analytics, merchants no longer have to build planning reports manually, for example—a practice already in place in some apparel companies.

“The automation of insights is expected to have a meaningful impact on the way a merchant works, how decisions are made, and what new capabilities will be required,” McKinsey said, even as these professionals assume the duties of leading a “cross-functional team” and serve as more of a category owner.

The consulting company cautioned that automation can only handle so much, noting that areas like sourcing and vendor negotiations “will continue to require a meaningful human touch.” Still, internal and external data can aid in decision-making for these functions as well, McKinsey added.

In order for merchants to operate on future terms, retail organizations will need to bolster their investments in four areas that form the foundation for the business. For one, retailers will need a commerce approach that’s flexible enough to serve the many ways products are sold through digital outlets and embrace how microservices and APIs can meet future needs. Next, retailers will need to graduate from data novice to data master, as this will inform virtually every aspect of the enterprise, whether online or in store.

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“Enabling merchants to make data-driven decisions will start with the use of a well-established data-governance model that includes data access, ownership, and classification,” McKinsey said. “The model will be owned by the merchandising business units and supported by ‘data stewards’ from the IT and business teams.”

Retailers will also need robust analytics and machine-learning capabilities, and as part of the shift away from manual processes, McKinsey sees leaders leveraging “work flow–management tools, optical character recognition, and robotic process automation to streamline work.”

Perhaps most important, tomorrow’s merchants will be rewarded for taking risks and encouraged to innovate within their organizations as a means of differentiating from the competition.