Despite being in the retail space for over a decade and working closely with some of the world’s most iconic brands, I’m consistently stunned by the volume of waste this industry continues to generate. 

Recently surfaced photos of the Atacama Desert in Chile show mountains of unsold jeans, jackets, purses, dresses, and more piling up at the jaw-dropping rate of 39,000 tons per year. And this is just a fraction of the annual 92 million metric tonnes of textile waste produced by the global fashion industry.

While statistics like these have spurred many brands to invest in more sustainable materials, this is only part of the equation. Not only are consumers satisfied with products for half as long as they were 15 years ago, but retail overproduction has reached an astonishing 40% per season. 

Unfortunately, much of the blame can be placed on traditional merchandising practices. As supply chains, technology, and consumer purchase behaviors have evolved over time, the way brands determine the variety and volume of products to bring to market has remained the same — and the effects are becoming increasingly far-reaching and profound. 

Back to School

Every August my siblings and I would pile into the car and head to the Maine Mall in South Portland for back-to-school shopping. We’d go straight to the same sporting goods store to buy a pair of back-to-school shoes, and head directly from there to our go-to retailer for a few outfits. As far as we were aware, the total world of available products existed within the shelves and displays of these two stores, and our purchase decisions were influenced primarily by what caught our eyes on the mannequins.

Now, contrast this with the back-to-school shopping experience most kids have today. Local malls still exist, of course, but more than 80% of consumers prefer to start their shopping experience online. Algorithms feed them hundreds of personalized product recommendations directly from dozens of brands each day. Social influencers live tweet runway looks from across the globe for real-time consumer reactions. Fast fashion brands adapt and mass produce the latest styles before you can even say “TV commercial.” 

Shoppers spend hours researching products and reading peer reviews prior to ever stepping foot inside a store — that is, if they visit the store at all. eCommerce has made it possible for consumers to buy almost any product from nearly any brand in the world with a simple smartphone tap or two. 

While brick-and-mortar sales are expected to remain essentially flat over the next year, eCommerce is projected to grow 16.1% in 2022, surpassing the $1 trillion mark for the first time in history. Meanwhile, global social commerce is anticipated to grow 3x faster than eCommerce by 2025 as more Gen Zers come of age and flex their buying power.

The shopping experience has changed drastically since I was a kid just a couple of decades ago. Back then, consumer options were limited to a few big retailers and brands with millions of advertising dollars and the scale to command nation-wide shelf space. Brands basically had the power to control consumer demand by being one of the only shows in town. 

However, most brands today still approach merchandising the same way they did before consumers had real-time visibility into trends and reviews, easy access to near-unlimited options, and the ability to purchase products from around the world on demand — and it’s leading to a staggering amount of waste and missed opportunities.

Traditional Merchandising Troubles

Brands typically create and release 3-5 large seasonal assortments each year. An assortment architecture is defined based on a season’s financial plan and brand strategy. From conceptual direction and new styles to carryover pieces and regional SKU depth, each of these decisions plays out through a series of large milestone meetings and surrounding scrambles to have all the materials ready in time for the reveal. 

This entire concept-to-consumer process usually takes 18-24 months — and therein lies the first, most obvious problem. Because consumers no longer have to wait for big brands or retailers to unveil the latest and greatest styles, fashions change greatly from the time a line is conceived to when it’s actually released. 

Not only does this make it difficult for brands to be responsive to emerging trends and current events, it also leaves them vulnerable to unexpected supply chain disruptions and economic downturns. The risks associated with such large, infrequent releases cause brands to play it safe by making incremental improvements to tried-and-true best sellers, rather than prioritizing the bold experiments and creativity required to capture consumers’ attention today and grow market share.

Despite such long planning cycles, designers, product managers, and merchandisers are tethered to their calendars. Teams must operate within extremely tight deadlines and work on multiple seasons at once to deliver on schedule. “Big reveals” create a pressure cooker-like environment where stakeholders feel they must fight to make their opinions heard before it’s too late, rather than collaborating or using data to objectively guide assortment decisions. Too often the loudest voice in the room wins.

In addition to relying on stakeholders’ experience, intuition, and opinions, brands often fly designers to fashion capitals like Paris, engage in competitive shopping, and research trends on social media. Beyond this, some 60% of product and merchant professionals consider past sales data (which the global COVID-19 pandemic showed us is not always relevant or helpful), while 59% factor in market trend data when building assortments. However, most brands still fail to collect data directly from the source best able to accurately predict demand and right-size investments: consumers. 

In the US alone, retailers are currently sitting on roughly $1.35 in inventory for every dollar of sales they make. That’s a lot of money tied-up in products – and making too big of an investment runs the risk of dead stock. Furthermore, brands are increasingly missing the mark with consumer product satisfaction is also at an all-time low. Markdowns now represent 40% of total retail sales, compared to just 4% in 1980. What’s more, 60% of products wind up in the landfill within a year of being produced.

This seasonal, supply-driven merchandising approach worked when consumers waited with bated breath for brands to reveal the latest runway looks, and their entire world of options could be contained within the store shelves of the local mall. But today it’s time for brands to seriously reexamine the traditional merchandising approach and move toward a more consumer-obsessed, demand-driven model that protects their brand integrity, their market share, and the environment.

What It Means to be Consumer-obsessed

You’ve likely heard the term “consumer-obsessed.” But similar to words like “data-driven” and “disruptive,” a quick Google search shows that “consumer-obsessed” has many different meanings — and none of them are the same. So instead of giving you another definition, I’ll give you a litmus test:

If you had reliable information about your consumers’ future preferences but it conflicted with the assortment you were planning, would you revise your assortment to meet their desire rather than your own?

Consumer-obsessed brands (or those that genuinely want to be) will answer with a resounding yes. They understand that while it’s their job to lead the product creation process and have a distinct point of view, success ultimately depends on their responsiveness to consumer preferences and demand. They have the humility to admit that merely reviewing historical sales data and tracking cultural trends to inform their intuition just isn’t enough anymore, and they have the ambition to find a better way.

Consumer-obsessed brands are eager to solicit feedback directly from their current customers and the consumers they’re seeking to serve tomorrow before products are developed and assortments are finalized. They’re hungry to put these insights into action and use them to inform decisions around new colorways, patterns, design details, silhouettes, and more. They value efficiency, curiosity, and continuous learning. They realize that traditional merchandising processes, tools, and best practices simply don’t meet the needs of today’s digital, data-rich, and direct-to-consumer world. 

That’s why consumer-obsessed brands are adopting a more modern merchandising strategy that separates decision making workflows for incremental updates to proven carryover styles from those involving riskier, more experimental newness. Rather than releasing a few big seasonal assortments each year, these brands are moving toward a more nimble, iterative, and consumer-informed approach that breaks fashion lines into smaller, more frequent releases of just a few SKUs each. 

Instead of simultaneously reviewing hundreds or even thousands of styles in a single milestone meeting, decisions regarding core SKUs and small carryover updates can be treated as an efficient exercise in economics. This frees stakeholders to focus on testing and creatively honing innovative new styles — styles that may ultimately become the core of tomorrow.

The Benefits of a Consumer-obsessed Merchandising Strategy

We’re seeing a growing number of cutting edge brands adopt this modern, consumer-obsessed approach to merchandising — and it’s easy to understand why. Replacing design- and supply-led, two-year assortment development processes with more frequent consumer demand and data-informed releases has many short and long-term benefits.

First, it allows brands to quickly cater to and capitalize on rapidly evolving fashion trends and current events. Releasing smaller volumes and varieties of experimental SKUs allows brands to be more creative, learn quickly, and adapt their assortments with far less risk. 

Shortening the time between concept and release improves brand agility, effectively minimizing traditional challenges associated with changing consumer preferences, supply chain interruptions, and market downturns. It also makes it easier to accurately predict demand and right-size buy depths.  

The ability to give consumers what they want when they want it increases awareness and revenue. Brands that do this in a measured, data-informed manner make small, sure bets that contribute to major advancements in economic and environmental sustainability. Fewer markdowns (which cost retailers more than $300 billion a year) means higher brand integrity, better margins, and greater loyalty. Less overproduction and fewer unsold goods means healthier air, cleaner water, and a better future for everyone — which is the greatest benefit of all. 

Finally, from an internal perspective, relying on consumer data to inform decisions removes a lot of pressure from product review cycles. Iterative releases eliminate stressful “big reveals” and the need to work on multiple high stakes assortments at once, helping teams zero in on key discussion points, collaborate effectively, and reach consensus more quickly. Stakeholders have the time, space, and information necessary to confidently pitch ideas and drive the organization-wide conviction necessary to deliver truly amazing products.

MakerSights Modern Merchandising Maturity Model

It’s clear that a modern merchandising strategy provides many advantages for brands, consumers, and the environment. But the transition definitely doesn’t happen overnight. Brands must make a conscious and collaborative effort to put the consumer first, embrace new data and technologies, and evolve gradually at their own pace. 

We at MakerSights have had the privilege to work with and support some of the world’s leading brands over the course of their transformation to consumer-obsessed product development and merchandising. Along the way, we’ve identified common bottlenecks and stumbling blocks, top data sources and tools, and key opportunities and best practices. 

Now, we’ve compiled our learnings, industry expertise, and proven success into a five-stage maturity model. We recognize that every brand’s exact journey and challenges are unique, so we recommend cherry picking the tactics that work best for you and skipping over those that don’t. But in general, following the steps outlined in the following stages is sure to help bring your brand that much closer to achieving modern merchandising maturity.

Stage 1: Inform Decisions with Consumer Data

Step outside your brand’s echo chamber and learn the best data sources and methods for collecting direct consumer feedback to guide decisions around new categories, colors, fabrics, styles, and much more.

Stage 2: Digitize Milestone Meetings

Explore the tools and tactics brands can use to digitally transform line reviews in a way that streamlines milestone meetings, accelerates decision making, and helps stakeholders break free from their calendars.

Stage 3: Collaborate with Purpose and Confidence

Craft better assortments in less time when stakeholders collaborate with confidence by centralizing team feedback, focusing discussion on key points of contention, comparing qualitative and quantitative data to drive objective alignment, and more. 

Stage 4: Remove Silos Between Product and Go-to-Market

Improve regional performance and significantly reduce waste when you incorporate go-to-market data and teams earlier in the product creation process using a cohesive concept-to-consumer approach.

Stage 5: De-risk Major Releases with Incremental Wins

With the right data, tools, and processes in place, it’s time to learn how to take the final and most challenging step toward becoming a consumer-obsessed brand: trading seasonal assortments for smaller, faster, and responsive releases.

Over the next several weeks, we will release dedicated content across these stages. I hope you’ll check back in and follow along as we live out our brand purpose to radically reduce waste by helping product managers, merchandisers, and brands become more consumer-obsessed. 

If you're ready to begin your transformation, you can download our comprehensive Modern Merchandising Maturity Model eBook and get started today.