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Footwear Experts Say Retailers Must Innovate Or Bust
2018/5/14 15:58:18 Source: .forbes.com Author:Greg Petro 点击率:
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Earlier this month, I attended the FDRA Executive Summit, where I learned that while footwear sales have risen for the seventh straight year, same-store sales actually contracted -0.9 percent in 2017. According to a report released by FDRA, “Shoe Review Footwear Report 2017,” the disparity between demand and actual sales will continue to spur fallout for the sector through 2018 as the industry responds to dull sales and declining store numbers. Footwear retailers are predicted to close hundreds of stores nationwide. On the contrary, there are still new stores being built that are having big success.

• With demand for footwear strengthening, the report begs the question: “How can demand be high but same-store sales be falling?” The FDRA’s report points to a number of factors including the weakening dollar, higher interest rates and record-high average duties on footwear imports last year. But the true disparity lies in where and how consumers are shopping, as big-box stores, online-only retailers and other channels capture a greater share of overall shoe sales.

• So what are traditional footwear retailers doing wrong? As I mentioned in a recent First Insight blog, footwear remains one of the toughest segments in the retail industry. It’s likely that many footwear retailers feel their hands are tied. With manufacturing largely based in China and not likely moving closer any time soon, product introduction cycles are long. Further, development costs are high and manufacturing is complicated. Add in consumers’ need for fast changing fashion and ever-changing style preferences, and you have an industry model in a state of disarray and in need of drastic innovation and digital transformation - fast.

Dick Johnson, Chairman, CEO and President of Foot Locker, captured this sentiment best during his remarks at the Summit: "The old model of guessing eight to nine months in advance what the consumer might want isn't going to work anymore. We need to shorten product development cycles. The consumer wants new, the consumer wants fresh."

But how? Last year’s overhaul to the U.S. tax system couldn’t have come at a better time. With billions of dollars in savings being injected into the retail industry this year, footwear retailers now have a golden opportunity to invest in innovative solutions that can close the gap between their businesses and big box stores and online-only retailers. But that means changes to their existing platforms that inject new, innovative solutions to shorten the production cycle and ensure the products and pricing are in line with consumer expectations.

According to Carol Spieckerman, President of Spieckerman Retail, who spoke during the Summit, this is critical for survival. "The new model for retail is ‘platform plus,’” she stated. “It's all about more, more, more. Retailers cannot focus on their core; they need to add pieces to their platform, to their core, to their foundation.”

So what pieces? Most of footwear’s innovation should be centered on data to streamline efficiencies, minimize production cycles, and align with the needs of modern consumers. Here are three digital technologies worth considering:

Voice of the Customer

Predictive Voice of the Customer data and analytics are powerful tools in determining pricing, selection and personalization of shoes in a way that can shave weeks or months off a development cycle. The success of this technology is built on using crowdsourced data to inform early-stage product development and merchandising.

“We’ve used predictive analytics for more than a year now to determine inventory positions on styles we believe in, and to determine how to best price products for the consumer as well as predict the average unit retail over the life cycle of the item,” reported Alex Del Cielo, Chief Executive Officer of Camuto Group, in a recent blog. “We are seeing positive results across the board in terms of initial pricing and margin enhancement.”

Optimized Line planning

Optimized Line Planning automatically integrates data from multiple sources - including historical sales data, trend data, competitive data, CRM data, social media feeds and forward-looking voice of consumer data - to determine the groups of product attributes which will resonate best with different consumer segments. It can also forecast the revenue share expected to be generated so designers and merchants can be more confident that their line plans will achieve their financial commitments and objectives.

3D CAD Technology

Retailers should also consider investing in new, innovative 3D CAD technology to test designs sooner in the product development lifecycle and improve forecast accuracy. By being able to test new products in digital form, retailers can significantly shorten the production cycle.

One great example of how 3D design can be leveraged is through the recently announced Material Exchange Platform from FDRA and PTC. The Material Exchange is an advanced platform that uses digital technology and data to allow companies to pull material specs and pictures into 3D design programs. Rather than sifting through dozens of physical material swatch books, they can now change materials and colorways instantly and continuously throughout the design process. It also enables development teams to gain line-of-sight into material costs, availability, quality, and compliance issues.

While data is key, you can’t mention it without cringing a little due to Facebook news and the coming GDPR Guidelines taking hold at the end of this month. Summit panelists also mentioned the need for data protection being three times higher on the heels of Facebook’s recent privacy scandal. It’s worth getting up to speed on the ethics and regulations around data collection and usage. This article is a great primer on GDPR. We’ll be talking more about what the Facebook fallout means for the retail industry in an upcoming post.

The retail industry at large is waking up to the power of data-driven technology. Walmart’s purchase of Jet.com and Macy’s purchase of Story and BlueMercury are great examples of traditional retailers amping up their platforms to better serve modern consumers. Footwear should not be an exception.

With this year’s tax cuts, there will likely be no better time for footwear retailers, like the retail industry at large, to adopt innovative technologies. It doesn’t need to be a guessing game anymore. “Innovation is key to the future,” President and CEO of FDRA, Matt Priest, rightly noted during a panel he moderated on moving from analog to digital technology in footwear.

Now with a tailwind of additional tax dollars, footwear brands willing to invest in the right data-centered technologies to understand what their customers want and make a great differentiated product faster and priced right will be better able to reclaim greater share, and increased profits, in the evolving footwear industry.

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