In the age of modern retail, brands have come to recognize that data’s value is nearly impossible to overstate.
From a new class of direct-to-consumers to established labels looking to maximize their impact, brands are increasingly turning to retail tech solutions for answers about which products to make, how many to buy, and how to present them most effectively.
That knowledge is gleaned through constantly evolving data sets that are managed and analyzed by third-party platforms. The data business is a thoroughly 21st-century concept that has nonetheless become indispensable to brands looking to capture consumers’ hearts and wallets.
NetSuite, a cloud computing company that offers enterprise resource planning (ERP), has found success in recent years through its ability to provide brands with data-driven insights to assorting and product planning.
Los Angeles-based handbag company Hammitt has been using the ERP platform for about a decade, founder Tony Drockton told Sourcing Journal. Moving into the new retail age means having a grasp on the arena’s technologies, especially data-driven ones, that can help fashion companies plan effectively, he said.
The handbag company has maintained a consistent presence in valuable department store chains like Dillard’s and Von Maur, as well as a slew of independent retailers, over the past 10years. But over the past two years, Hammitt’s DTC business has skyrocketed to about 50 percent of the business, Drockton said, growing by about 150 percent in a year’s time.
Most of the business centers around the label’s core, recognizable products, defined by buttery-soft leathers and a signature studded detail that marks each tote, clutch and satchel.
According to Drockton, his lead designer looks to NetSuite not only for historical data about color ways and silhouettes to build upon past successes, but also to help intuit logical ways to break new ground creatively. About 30 percent of each new line centers around trend-focused fashion pieces, and 15-20 percent is comprised of experimental styles dreamed up by designers.
Tools like NetSuite have enabled Hammitt to be nimble in both predicting which products will sell through most successfully, and in leveraging unexpectedly popular products to their greatest advantage.
A recently released clear, stadium-ready bag started out as a one-off experiment, but sold out within days, Drockton said. NetSuite’s integration with the supply chain allowed Hammitt to replenish quickly to avoid disappointing shoppers, and the bag was back in stock within a month of selling out. That’s because data predicted that sales trajectory early, and set the wheels in motion to execute more of that product.
NetSuite also pulls data from Hammitt’s retail partners and offers visibility into what’s performing well, where. While most retailers do well with the brand’s core selection, there are outliers in specialty retailers and boutiques who want the brand’s most trend-forward products. And the true, limited-edition specialty products sell best on Hammitt’s own site, Drockton said.
“The retail apocalypse isn’t happening,” he said, noting that consumers still have the appetite to shop as they always have. But now, they’re looking for increased personalization, and have come to expect a seamless experience both in store and online.
While shoppers still like to touch and feel products in person, they also prioritize convenience. “Time is important to people, and it’s something we can’t make more of,” he said.
Savvy shoppers looking for something specific during a store visit are turned off when they walk in and the product isn’t available, he said. They want to know that the styles they’ve seen online will be in stock before they take the time to venture out. Retail technology platforms can track inventory and manage that experience, he said.
“From our side, I can tell you that we’re trying to deliver a better experience for the customer—that’s the goal of using data or any technology,” Drockton said.
At sustainable, fair-trade basics brand Pact, nailing product forecast and inventory management is “critical to the viability of the business,” according to CFO Drew Cook.
With consumers’ desires changing so quickly, and with so many options to choose from in every category, it’s imperative that Pact know what its shoppers are looking for before they even pull the trigger on orders.
“With apparel, there’s such a long lead time,” he said, adding that it takes Pact about six months to receive shipments of new products from its factories in India. While brands can never be sure how consumers will behave once a product is on the market, they’re forced to make decisions that impact cash flow months in advance, Cook said.
Pact began primarily as a wholesale business, but now that model has totally flipped. Now, 90 percent of the business is direct-to-consumer. The company has been using the NetSuite platform for about seven years, and has been running its DTC operations on the site for about four.
Overall consumer trends precipitated the shift, Cook said. Pact was doing a strong wholesale business at big-box stores until Amazon hit the scene with strong apparel offerings of its own. Channels like Target, which was once a partner, were “losing wallet share from customers” to the online marketplace at large.
He also noticed an erosion of some of the other retail channels that the brand was looking to pursue, like department stores. One of the brand’s best customers is Whole Foods, Cook said, as it has been insulated from some of the competition issues facing retailers known for apparel.
By contrast, the direct-to-consumer business allows for a connection with the consumer. It also gives Pact the ability to make real-time decisions about assortment, pricing and promotions—all of which can have an immediate impact on the business.
“At wholesale, making changes can take months, and they’re dependent on a buyer’s approval,” Cook said.
One of the most important things about NetSuite’s technology is real-time visibility into inventory and sales orders. “It allows us to pull all the levers of our e-commerce business pretty quickly,” he said.
Maximizing capital efficiency depends on the company’s ability to match sales to forecast data, Cook said. It’s important that Pact doesn’t sell out of product too quickly and miss margin opportunity, or sit on large piles of inventory at the end of the season.
When a new product launches, Pact assesses how it’s selling after about two weeks. From there, the company will adjust pricing based on whether a product is moving quickly or lagging in consumer interest.
The team will also limit promotional opportunities on products that are performing well, so that they’re not driving unnecessary discounts to products that are likely to sell through.
The availability analytics from NetSuite gives the brand confidence in managing trials of new product. Pact is currently exploring new categories, from fashion to bedding and bath products. They haven’t had to alter any of the e-commerce infrastructure, Cook said, and that’s made testing these products much easier.
“We do our best to forecast based on comparable products, and we have confidence knowing that real-time insights will be available upon launch,” he added.