The retail industry is notorious for moving at lightning speed. From one SKU to the next, one season to the next, and one trend to the next. The holiday season is no exception – making it crucial for teamwork across departments for success. As retailers prepare for Holiday 2024, a significant challenge has come to light: the misalignment between marketing and merchandising teams. This issue, highlighted in our latest report, "Retailers’ Blind Spot for Holiday 2024," reveals how these two departments often operate in silos, leading to missed opportunities and inefficiencies. Aligning their goals and leveraging data-driven insights is critical to turning this blind spot…into a strength.
The Ongoing Quest for Customer Insights in Retail Marketing
Marketing teams are responsible for driving consumer engagement and increasing brand awareness, and ultimately that customer opening their wallets to buy the brand’s products. From developing compelling promotional strategies, executing multi-channel marketing campaigns, and finally analyzing the shopper’s behavior – marketing teams are always looking to optimize their advertising efforts.
However, these teams face several challenges, such as predicting which marketing mediums will be most effective and crafting messages that resonate with their target customers. Aligning campaigns with products that customers truly want and need is also a significant hurdle. In fact, 53% of marketing teams struggle to determine which marketing mediums their target consumers will use the most.
The Strategic Focus for Merchandising Teams
On the other hand, merchandising teams are focused on stocking the right products in the right buy depths and optimizing pricing and promotion strategies to maximize profits. They are typically always battling planning 12-18 months in advance, while simultaneously responding to market trends and consumer demand - all while managing inventory to avoid excess or stock outs.
It's safe to say that merchandising teams have some big hills to climb, ensuring their selected merchandise aligns with their target consumer’s preferences. Add in fluctuating pricing strategies to remain competitive versus brand rivals. 35% of surveyed retailers are concerned about reactionary promotions due to misalignment between merchandising and marketing teams. All of which can lead to missed sales opportunities and increased costs. In First Insight’s Holiday report, 73% of merchandising teams were “Not sure if items planned for web pages, ads, catalogs, etc. are the most highly valued by target consumers at the planned ticket price.”
The Misalignment Problem
The gap between marketing and merchandising teams can be described as a lack of coordination and communication. Often, these teams work independently, focusing on their individual goals without a cohesive strategy. The impact on retailers’ performance can be substantial with effectiveness and profitability suffering from the lack of unified approaches. Without coordinated efforts, retailers risk missing the mark on consumer needs and preferences. With so much noise in the market, connecting with customers has become increasingly difficult in recent years. Brands who are looking to take it a step further and build deep, enduring relationships with those consumers to keep them coming back for more? That’s an even greater challenge.
Bridging the Gap with Voice-of-Customer (VoC) Tools
Voice-of-Customer (VoC) tools offer a powerful solution to the aforementioned alignment problem. These tools gather real-time insights into consumer preferences and behavior, providing a clear understanding of customer needs. But by integrating VoC data with AI-driven predictive analytics – now you’re cooking! With both marketing and merchandising teams aligning their strategies with actual consumer demand – it’s a winning combo.
VoC data enables smarter pricing, promotion, and inventory decisions, ensuring that marketing campaigns resonate with consumers and that inventory levels are optimized. Retailers who utilize VoC data can see up to 18% reductions in inventory and 25% markdown reductions, leading to improved efficiency, speed to market, and profitability.
Aligning marketing and merchandising teams through shared data is vital for retail success, especially when planning and making decisions for the holiday season – one of the biggest shopping events of the year. When retailers invest in VoC tools and foster collaboration between their internal departments, they can turn their blind spot into a competitive advantage. With the power of data-driven decision-making, retailers can meet their customers where they are.
Ready to look out into the horizon of the Holiday season feeling confident you’ve made all the right decisions? Chat with one of our retail experts and let us show you how our InsightSUITE can help make every decision easier in your product’s lifecycle journey.
