NRF 2016 is in the books and “The BIG Show,” as always, did not fail to deliver on the hottest topics in the retail industry.
This year’s Big Idea and breakout sessions covered everything under the retail sun: content and commerce, loyalty and luxury, behavior and buying, promotions and payments, mobile and modernization.
But it was the First Insight Big Idea session, “Using Consumer Analytics To Drive Financial Results,” that addressed the industry issue every retailer is dealing with: sky-high new product failure rates.
Greg Petro kicked off the event by quoting Harvard Business Review, MIT Sloan and Gartner – who all agree the current industry success rates of new products is around 50% or lower. He added that First Insight benchmarking paints an even bleaker picture, with success rates below 40%. “We’re missing the mark,” Petro said to the crowd of more than 250, “and it’s due to a faulty understanding of the consumer.”
Lois Huff, vice president of Client Insights and Strategy at The Limited, a brand dedicated to the sophisticated woman professional, was next to speak to the standing-room-only crowd.
Speaking about the evolution of the importance of the customer at the Limited, Huff said, “[We needed] the client perspective on what she wanted…[since then we’ve moved] to a new, more balanced, client-led approach to our product decision-making framework. The client is front and center.”
“This new approach is a balanced approach, and First Insight is an important part of that…. [By involving First Insight] we are striving for a much more scientific and client-driven approach to inform the depth of our buys,” she added, noting the success customer analytics has added to the brand. Specifically, she said this past fall season, styles which First Insight designated as winners performed significantly higher in terms of sales and margin at retail.
When asked by an audience member about achieving buy-in from the rest of the company when working with First Insight, Huff was quick to point out how essential buy-in is. “It’s really important that you get that buy-in. Trust and confidence in the insights are really important in allowing the merchants to effectively make the right decisions,” she said. “Our CEO is a huge proponent and believed in the science behind it…and that has been critical to the success,” Huff added. She also pointed out how the hard numbers from the pilot can create a solid business case in support of the tool.
Next up was Greg Girard, Program Director, World-Wide Omni Channel Retail Analytics Strategies for IDC Retail Insights, who added his analyst perspective on the importance and efficacy of consumer analytics. “[Analytics] are mainstream now…what we’re seeing is investments in advanced analytics and forecasting are the key additions that retailers are most likely to make.”
Girard added, “We find that retailers using new KPI’s, new data sources and new analytics, combining those three together, are 2 to 4 times more likely to get success out of their analytics programs than retailers which are not.”
Thomas Filandro, Senior Equity Research Analyst for Susquehanna Financial Group, LLLP, also had thoughts to share about consumer analytics. “Time has been compressed [for trends]. Mobile phones and internet have accelerated the speed at which we see trends and share those trends.” Filandro noted.
There is a need to create speed capabilities, he noted, first to identify trends and then to get those trends to the consumer in a timely fashion. Filandro believes you can’t just sell what you have, you have to sell what the consumer is purchasing. “So that means increasing open-to-buy, combined with greater and faster flexibility of testing capabilities, which First Insight does really well,” he said. “Identifying winners and losers can make or break a season, so crowd product sourcing, in-season testing and product feedback are crucial for today’s fast paced trend world.”
Like Filandro, Craig Fleishman, SVP Corporate Development & General Counsel at Rebecca Minkoff, also expounded on the importance of speed. One of the latest announcements from the brand is that they are moving to a “see now, buy now” paradigm.
“We no longer have the time to put products on the runway, decide who the bestsellers are going to be and manufacture them to be in stores 6 months later. We’ve got to know immediately what’s going to work,” Fleishman said.
He noted that consumer analytic tools like that which First Insight offers make it possible to gather actionable insights in a brief-enough period of time to make this new paradigm a possibility. Fleishman believes that all retailers will eventually move to the same paradigm.
Adding consumer analytics has been crucial for Rebecca Minkoff and The Limited in building customer-centric brands. It’s one possible solution for those sky-high new product failure rates, as it opens the door for a better understanding of consumers and their needs.