Gone are the days that executives would all fly to Tokyo and sit behind a two way mirror observing eight women sitting around a table interacting with their handbags. Former VP of Merchandising at Vera Bradley, Joan Maxwell, remembers eating too many peanut M&M’s spending hours hanging onto every word, desperately waiting for that “a-ha” insight derived from a facilitator questioning the women on their pocket preferences. These focus groups were both incredibly expensive and excessively time consuming. Fortunately, the way consumers shop and interact with brands has shifted – technology has crept into the retail industry. Valuable and actionable consumer feedback is at your fingertips, now all you need are the resources to acquire it.
Unfortunately, when looking at technology budgets as a percentage of revenue, consumer business and retail fall below the average. Less than half of these companies plan to increase their investment. Retailers and brands are far behind, and product teams are lowest on their list of priorities. Chris Hull, former Chief Merchandising Officer at Shinola, had to intentionally create a line item and justify a technology budget to unlock tools of innovation for his team. Counterparts in marketing have seen their budgets increase over the years to accommodate new technology while the product team’s budget has remained stagnant or non-existent.
Retailers are investing in technology for many of their teams, but the most critical driver of revenue, the product team, hasn’t been so lucky. Macy’s has invested in “Scan, Pay, Go” enabling their customers to skip the checkout process, Burberry has incorporated AI and big data into it’s digital services, and Nordstrom acquired two digital commerce startups to develop connections with customers. Now it’s time to invest in technology for the designers, product developers, merchants, and planners.
The product team has a significant effect on the bottom line; every little decision they make affects the gross margin. Currently, they are relying on their gut instinct and historical data to make these important decisions. Product teams need their own technology budget to hold control of their tools in order to decide when it’s time to incorporate a new technology or get rid of one that isn’t helpful anymore. The designers, product developers, merchants, and planners should have the power to innovate their processes if they see fit.
Don’t miss out on the opportunity to empower your product teams with the technology they need. They are the experts on the brand and vision, and could be spending more time thinking strategically. Empower your product team to lean into technology to maximize their talent and de-risk their decisions by combining art and science. It’s time for merchandising’s technology transformation. Why wouldn’t you want to arm your designers, product developers, merchants, and planners with the best, most powerful tools to acquire valuable data? The consumer and industry are changing rapidly, so get technology or get left behind.
Oh and don’t worry- you can still snack on peanut M&M’s.