The growth of digital channels and omni-channel consumer behavior is having a huge effect on marketers and merchandisers in retail.
Once marketing was the communications arm of merchandising. Main task was to promote the categories and assortments negotiated with suppliers. Now, it is an equal partner. Today marketing handles all things customer: customer insights, customer focus, customer communications, and customer promotions.
In the new RSR report ‘Bridging The Gap Between Merchandising And Marketing: Closing the Loop’ increased price sensitivity seems to be the biggest driver behind pricing strategies.
At the same time marketers are struggling with digital marketing. The RSR report also shows that the biggest two challenges facing them are the following:
1. knowing which tactics work best in which channels and
2.measuring the effectiveness of different marketing tactics.
Unfortunately, the pressure to promote combined with a lack of understanding of digital channels is a dangerous one. Retailers find themselves running more promotions via channels they don’t understand. They end up with little visibility into how well they are working.
The interesting not yet surprising stat is that indeed the more successful retailers struggle here. 52% of retail winners have stated they are challenged with predicting the impact of future pricing, assortment, and promotional decisions vs only 31% of others. Seems the better you are at driving extra demand the harder it becomes to maintain product availability. Also not surprising stock-outs occur in unexpected places and there are unanticipated margin reductions, which ultimately impact retailers’ profits.
The further result is unforeseen ripple effects on merchandising’s carefully prepared plans, which is causing increasing friction with marketing.
What’s to be done? According to RSR customer segmentation can serve as a bridge to diffuse the tension. While focusing on specific categories and segments can help both parties understand the impact of promotional activities and reduce the unintended consequences.
Learn more with your complimentary copy of the report.
#retailmarketing #retailmerchandising #omnichannel #retailsystems
Joerg Koesters is a Technology Marketing Executive with passion for Retail and Consumer industries, and a retail ambassador for SAP.
Interested in your feedback. You can also get in touch at @joergkoesters on Twitter.
This blog appeared first on Digitalist Magazine by SAP
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