Unified Fashion Journey: Demand-Driven Merchandising Strategies

Omnilytics’ Unified Fashion Journey operating model is aimed to support and provide data-backed insights at every step of the retail process. In this report, discover how the model applies for demand-driven merchandising strategies in 2021.

Written by Atiqah KamarudinJanuary 12, 2021

Introduction

Key Insights

  • New Data Integration: The increasingly crowded online space calls for a new business operating model known as the Unified Fashion Journey, which focuses on demand-driven merchandising with internal and external e-commerce data to achieve market visibility and win consumers.
  • Tiered Pricing Strategy: Reviewing competitors’ activities with a demand-led perspective not only validated Pull & Bear and Stradivarius’ trade success with good-better-best pricing, but also uncovered an optimising opportunity for the former on Jeans at USD 20-30 price range.
  • Slow-Moving Categories: Identifying slow-movers is as important as understanding bestsellers. H&M’s ageing products need to be addressed to start the new year with a healthy inventory level.

As stated in The State of Fashion 2021 by Business of Fashion and McKinsey & Company, the digital adoption has soared during the Covid-19 pandemic with businesses expecting online channels to grow by 20% in 2021. However, with tough trading conditions expected to persist, demand for fashion is unlikely to return to pre-pandemic level. Many brands have taken the data-driven route with proven success, as the pandemic has accelerated the demand for all things digital throughout the fashion value chain.

To empower brands in making informed decisions in the new normal, Omnilytics has developed the Unified Fashion Journey operating model to deliver data-backed insights.

Incorporate Insightful Data From Start to Finish

Supporting the four main retail processes:

  • Research & Strategy: The process of researching on market is now backed with insights on consumer demand and competition. With Omnilytics’ data validation in this process, brands can accurately forecast sales and optimise OTB to maximise margins.
  • Assortment Planning & Strategy: Omnilytics supports the creative process of building a product mix by factoring in data-backed trends, prices and consumer demand.
  • Manufacturing & Shipping: Optimise product allocation and distribution by evaluating channels’ performances. Omniltyics helps to assess and identify the right platform to meet a brand’s positioning and business goals.
  • Operations & Analysis: Brands can react quickly and with confidence, backed by insights on the market and competition landscape.

This report demonstrates how a brand’s own data when combined with market e-commerce data can provide a business with a holistic perspective for effective actions. Over 300,000 data points were screened from July to December 2020 across womenswear categories on these key US fashion retailers:

 

  1. Asos
  2. H&M
  3. Zara
  4. Topshop
  5. River Island
  6. Pull & Bear
  7. Fashion Nova
  8. Forever 21
  9. Stradivarius
  10. Bershka

 

All data used in this report comes from products retailing online as tracked by Omnilytics, unless otherwise mentioned.

content image-2 Unified Fashion Journey: Demand-Driven Merchandising Strategies

Research & Strategy

Uncover Insights Through Research

Market research is the first important task for every successful business. It minimises risks when making key business decisions, with insights on competition as well as validated consumer demands and trends.

In this current climate, a thorough market research should be done consistently to monitor the shift in demand and the latest trends. With Omnilytics’ dashboard, brands can quickly access the relevant insights in a snapshot without having to manually click on competitors’ websites for information, as seen in Chart 1.

Identify Direct and Indirect Competition

With a market size projected to reach USD1 trillion in 2025, the fashion industry is facing fierce competition with retailers and brands scaling omnichannel strategies to capitalise on the e-commerce boom.

To rise above the competition, it is pivotal for brands to first understand their position in the market and against direct competitors before crafting action plans.

Developing a brand positioning map is now effortless using Omnilytics’ Competitor Benchmarking module (Chart 2). With greater visibility on current positioning, brands now have the clarity to determine where to reposition themselves. The outcome of this decision will lead to strategies that will realise the new positioning.

 

content image-3 Unified Fashion Journey: Demand-Driven Merchandising Strategies

Assortment Planning & Sourcing

Reflecting on the immediate previous season’s performance is now more crucial than against the past season, to identify the right assortment mix for future strategies. As the pandemic has worsened fashion’s excess inventory issue and proliferated markdowns, assortment planning is a key area to get right. This can be done by taking a demand-focused approach to the assortment strategy to increase full-price sell-through.

Identify Validated Demand Shifts

Overall, H&M’s performing and underperforming categories were in line with the ‘new normal’ lifestyle. With the waist-up dressing gaining popularity during the pandemic, Tops and Outerwear performed strongly at full price.

In contrast, Dresses warrants a risky category, registering a lower than average sell-out rate despite the high average discount. With low demand for going-out attire, brands should trade cautiously within this category. Granular analysis on a subcategory level will help brands identify the type of dresses that are in demand to invest in.

Find Opportunities to Optimise

Understanding the relationship between category mix and performance enables brands to uncover category opportunities. In the case of H&M, Intimates was a category of focus as it delivered an above average full price sell-out. Similarly, the brand should also capitalise on the ongoing popularity of Activewear, as it performed strongly in both sell-out metrics.

While Maternity Wear did not trade as strongly at full price, the limited assortments by competitors gives H&M the opportunity to optimise to an authoritative positioning in the category.

 

content image-4 Unified Fashion Journey: Demand-Driven Merchandising Strategies

Assortment Planning & Sourcing (cont’d)

Drilling further into Tops, it is apparent that subcategories which can be doubled up as loungewear performed exceptionally well. These included T-Shirts, Tank Tops, Cami Tops and Crop Tops, which delivered strong full price sell-outs despite high discounted product contributions (Chart 4).

While Bodies only accounted for 3% of total Tops assortment, the subcategory showed great potential as its sell-out rates were above the category average. The style, which was trending in the market since Spring 2020, cemented itself as a must-have item in Fall (Chart 5).

 

content image-5 Unified Fashion Journey: Demand-Driven Merchandising Strategies

Assortment Planning & Sourcing (cont’d)

Spot New Opportunities

Reviewing external market and competitors’ data is not consistently practised by most brands but it is an important step to discover new areas for expansion. With Omnilytics, brands have complete visibility into competitors’ category performance and products on demand all in one place, at the click of a button.

The top three biggest categories by competitors yielded similar results as H&M’s. While analysing the trade of six key retailers (Chart 6), Jeans and Shorts cropped up as opportunities with strong performance across total sell-out and sell-out at full price. The former category’s full price sell-out was led by Inditex’s Pull & Bear and Stradivarius. This shows how external data is important in uncovering potential assortment gaps in ensuring competitiveness.

As Jeans and Shorts were underperformers in H&M (Chart 3), this should prompt the brand to investigate why they failed to work, alongside determining what drove customers to purchase these from competitors.

 

content image-5 Unified Fashion Journey: Demand-Driven Merchandising Strategies

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Meet the Author

Atiqah Kamarudin

Nur Atiqah Kamarudin is a Senior Business Intelligence Analyst at Omnilytics. With past experience at Nielsen and Euromonitor, she has spent years analysing data and unearthing insights to help brands and retailers make informed decisions. She currently produces reports on the fashion industry and its changing retail scene across the United States, United Kingdom, Australia and Southeast Asia.

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