By John Duke
Keeping up with the exponentially increasing speed and complexity of modern retail requires not just customer-facing initiatives but also a robust and flexible merchandise operations solution that provides
a critical foundation for the future of retail.
Capabilities that are highly visible to the customer, yet built on legacy systems that were never designed to support modern processes, are inefficient, often ineffective, and ultimately incapable of enabling optimal customer experiences that are demanded of retailers today. Sometimes, the decision to invest in a new merchandising system is event driven — a situation where retailers can’t keep the lights on unless they upgrade, like an acquisition that significantly increases scale, international expansion, or entering an adjacent line of business. In other situations, the challenge is cumulative in effect, where there is a growing list of annoyances that individually don’t have a significant business impact but collectively create inefficiencies that inhibit growth.
Retail of the future is customer driven and analytically robust. Modern merchandise operations management solutions are purpose built for the analytical and experiential requirements of today and have the flexibility to expand on and enhance those capabilities in the future.
In our research and through discussions with a wide range of retailers about what aspects of modern merchandise operations management solutions are critical, several things stand out:
▪ The best merchandise operations management solution focuses on helping retailers serve their customers better, enabling better experiences, faster.
▪ Retailers want a foundational merchandising system that is purpose built for the analytical and experiential requirements of modern retail.
▪ Leading technology vendors are focused on helping retailers future-proof their organizations, anticipating and planning capabilities that meet their future needs while providing the flexibility to expand on and enhance those capabilities in the future.
▪ Modern merchandise operations management solutions have a high degree of automation built into as many processes as possible, helping retailers drive efficiency and accuracy while reducing the administrative workload of their employees.
As we assessed the range of vendors in this IDC MarketScape, these four areas were of critical importance to retailers, but many were less satisfied with their current solutions’ ability to meet these needs. As such, throughout the research, these areas proved to be strong points of differentiation
among vendors.
MARKETSCAPE VENDOR INCLUSION CRITERIA
Merchandise operations management software is the system of record for merchandising in retail.
These solutions typically represent the core product management system in most retailers, executing basic merchandising activities such as item management, inventory tracking, purchasing, and vendor management. Although they are responsible for managing and executing core retail functions and
operational tasks, they generally do not perform analyses or offer insights to support merchandising related decision making (e.g., planning, forecasting, and optimization). Merchandise management is usually tightly integrated with other applications that perform such functions, either as part of a vendor’s own software portfolio or with solutions from other vendors (e.g., price/promotion optimization, inventory planning, and merchandise financial planning).
Participants in this vendor assessment:
▪ Are established software vendors with prominent/visible market presence
▪ Deliver an enterprise-grade merchandise operations management solution for retail
▪ Have a solution that is capable of supporting tier 1 retailers at global scale, across both e-commerce and brick-and-mortar stores
▪ Own the intellectual property of the merchandise operations management solution (developed in-house or acquired via transaction)
ADVICE FOR TECHNOLOGY BUYERS
For organizations farther along the digital transformation journey, investing in a new merchandise operations management solution is an opportunity to go back to the basics, fixing and streamlining what likely have been band-aid solutions, workarounds, and inefficient processes that, while enabling critical processes and downstream analytics, decision support systems, and customer-facing capabilities, also have collectively created challenges and limitations for the organization.
For organizations that are earlier in their transformation journey, merchandise operations management solutions are a foundational element in the road map that can seamlessly enable future capabilities and solutions along the journey. Investing now, at the start of your journey, means getting it right the first time and avoiding needless workarounds and patches down the road, which will ultimately mean
an improved ability to quickly and efficiently adjust to the rapidly changing needs of the business.
In either case, there are several important considerations as you scan the market for the best solution for your organization:
▪ Look for solutions that are oriented toward the future of retail — those that are focused on helping you serve the end consumer better, that are purpose built for improved analytical capabilities, and that are focused on driving deeper automation across your organization.
▪ Look for vendors that can deliver what your organization needs in an out-of-the-box solution versus one that is customized. Leveraging an out-of-the-box solution can speed implementation, lower the overall investment, improve ongoing maintenance costs, and ease change management.
▪ Consider investing simultaneously in related solutions (e.g., customer data system, analytics, and insights engine) that not only create additional benefits but also make investment more efficient and change management easier.
▪ Consider vendors that can help you assess current processes and have a clear understanding of exactly how those will need to change in the future. Engaging the vendor on this early, prior to investment, will give your organization a transparent understanding of the impact.
For more information visit IDC Market Space
