Chief Merchandising Officers have one of the hardest jobs in all of retail.
Responsible for managing the majority of all cash that goes in and out of the business, chief merchandising officers, or chief merchants, have to make crucial decisions when negotiating with vendors and evaluating new products, as well as about seasonal inventory, pricing and promotions.
The job requires not just a deep historical knowledge of a company’s products and vendor relationships but also a keen sense of ever-shifting market trends and consumer behavior. Indeed, chief merchants at many top retailers worked their way up the corporate ladder over many decades, honing their senses by starting first at the store level before spending some time in either sales or marketing.
While many companies are choosing to add new, specialized job titles to the C-suite — reflecting the growing importance of these functions as their businesses change — the chief merchant remains a company stalwart. We need to recognize the vital role these executives play in retailers’ daily operations, as well as give them the tools they need to solve the challenge of omnichannel retail as their job changes.
Historically, chief merchants leveraged their experience and intuition when picking goods, and the most talented chief merchants were often tapped for the job of CEO. However, as retailers struggle to control costs and compete against e-commerce sites, some have scaled back or eliminated the position — to less favorable results.
Take the example of JCPenney. In 2017, the department store announced it would no longer maintain the position of chief merchandising officer, opting for a “simplified structure” for its merchandising decisions. The retailer’s outlook at the time was poor. It was forced to mark down its apparel. The company’s shares hit at an all-time low.
Fast-forward to 2019, when JCPenney, “over-assorted and heavy on inventory,” announced it would bring back the role of chief merchant amid other leadership hires designed to help the struggling chain get back on its feet and bring in new customers. The move to hire a new chief merchant points to the enduring value these executives hold, though modern chief merchants will do well to keep in mind the many ways customers interact with retail brands today.
Just as the digital retail revolution has changed the way consumers shop, chief merchants have to change the way they view the customer journey and experience. Consumers are no longer bound to mail-order catalogs, late-night infomercials and in-store purchases. Today, they have a great deal of choice and can compare in real time the differences in inventory, pricing and promotions.
For example, a potential customer might start their purchase journey with an ad served to them on social media or in a Sunday circular. Then they might do a bit of research on their phones to make sure the products they’re considering are offered at a good price. Maybe they visit a brick-and-mortar location to compare different items in person after checking online consumer reviews and in-store availability, only to go home and make their final purchase online.
These changes in consumer purchasing behavior require chief merchants to look at the whole picture of a consumer’s behavior. Chief merchants have to decide not just what items to sell, but based on their knowledge of customers, where and when to make them available. Such a lift requires chief merchants to rely less on their gut feeling and more on data-driven analytics — with clear visibility into all channels.
Increasingly, chief merchants are being selected for their ability to mix historical knowledge of vendor relationships and consumer preference with data-driven analytics. Though these executives may have started their careers as buyers or worked their way up from the store level, the job description of today’s chief merchant should also include some experience with data.
Big data cannot find the next big consumer trend, of course, or determine the value of categories that haven’t been established yet. For those kinds of tasks, the chief merchant remains essential. However, chief merchants can expand on these core duties by using data-driven insights to improve their processes.
For example, using hundreds of thousands of data points, machine learning can offer suggestions for how much product to order, where it should be allocated, how it should be priced and when it should be offered as a promotion. Chief merchants can review those suggestions, refine them and focus their efforts on high-level, strategic tasks.
Chief merchants don’t need to be data scientists to make data-driven recommendations, either. Recognizing that the chief merchant’s job should involve much more than analytics, companies should invest in solutions that automate data analysis to free up the chief merchant’s time to focus on managing vendor relationships and the buying and selling of goods. Doing so will position companies to empower the role of chief merchants as they are uniquely positioned to understand where data-driven improvements can deliver the biggest impact.
While data-driven analytics is becoming a chief merchant’s bread and butter, there are other important components to the retail experience that will help chief merchants thrive:
At the end of the day, the future of retail belongs to those who understand how to prioritize investments that leverage their data.
This article was originally posted here.
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