From product assortments to community engagement and internal operations, profit growth is only as successful as the individual parts of a fashion business. And with data piling in from infinite sources, it can be difficult to discern a) which insights are the right ones and b) how to turn them into stories to inform the next collection.
As heard in the LSKD X Style Arcade webinar, we tapped the keynotes for how to use data to inform profit growth strategies from Style Arcade’s Chief Operating Officer, Christine Reed.
Whether it’s pricing or product mix — consumer demand comes first, and understanding how to use your data will ensure a healthy profit cycle, based on listening to customers and creating products that resonate.
Here are Christine’s top data strategies to gain organic customer retention, increase lifetime value and boost profits.
How to use data for pricing
Setting up your product range for success means taking calculated risks based on data to grow sales and increase profitability at the same time.
1. Create a range plan pyramid:
Be strategic with your product once you have a framework in place. Identify the portion of your range that you're targeting to make up your volume product and set benchmarks on profitability. That enables you to take risks with new products that you can test with your customers.
2.Understand market value:
When you’re retail pricing, don't just go off a markup, gauge the market value based on your product data points. When you're quantifying your buys, consider the historical performance of styles, and then overlay that with your expectations on grading, taking into account the marketing investment.
3. Know your margin projections:
When margin is lower than expected it's either about unbalanced product mixes or certain data points not being captured. If your short margin pinnacle products overperform and you back into them to continue that performance - that's really going to hit your bottom line. You’ve got to plan out those mixes and then buy accordingly.
4. Track sell-through in season:
Once the product lands, tracking and adjusting your pricing strategies based on demand will help inform your decision of whether you wait for a sale period, or whether you take decisive action outside of the sale period.
How to use data for customer retention
Focusing on the psychology of customers acquired during sale events like Black Friday, you can avoid the cycle of vicious deeper discounting by catering to customers in-season.
1. Review volume price mix velocity across a range of pricing:
Some products only need a 10% discount to spike sell-through and others won't or don't move with deep discounts. Pick up on those data points throughout the season and track that product performance.
2. Understand your customer sentiment and the perceived value of your product:
The reality is that some products just don't land. It's important to respond to this and equally important that you take those learnings into the following season.
3. Monitor the pricing strategy by category:
Track your sale price brackets versus your RRP brackets. Then, drill into the product details to see where the outliers are. That really helps you to understand themes and get closer to reading what customers are telling you.
4. Check in on return rates and reasons consistently:
If you want to take that opportunity to get the right sizes in market, reviewing your data story across your product, including sell through cover and margin every week, you're going to be in the best position to respond accordingly.
How to use data to get your product mix right
Mitigating risk and balance newness within your range relies on taking a disciplined approach to planning and executing in-store strategies.
1. Creating the reason to buy and having a healthy injection of newness is important to keep your customers engaged with you. You need to pull together all of your product performance data points, with the starting point being the numbers of the comparative seasons and mixes across categories.
2. If you've got a retail network, you need to consider all of those stocking points and review the visual merchandising against customer feedback. It's important to understand both sides to tell the full story of a range with data. Then you can take those learnings into future range planning to help mitigate risk.
3. It's also important to review the range against your brand story and identify "is this newness"? An extension or is it a complete diversion? If it is a complete diversion to warrant that allocation of OTB, you need to be prepared to back it with marketing so your customers know to come to you for this product.
When it comes to being strategic about profit growth in a way that is authentic to your fashion business, “It’s about using those data points and understanding what your customers and your internal teams are telling you,” said Christine.
“Understanding the ‘why’ behind the performance is going to ensure that you're able to make informed decisions on how you plan future ranges.”
Image Credit: Elle
