The AlixPartners Retail Restart Playbook is a special weekly series of our Retail Viewpoint newsletter that provides in-depth answers and operational considerations for retailers as they reopen stores and restart business post COVID-19 closures.

Last week we tackled what to do with the product you own. This week, we turn our attention to the future. How do you ensure that you’re bringing the right product to the market at the right time? As retailers think about not just the now, but the next, product development milestones and deliverables that once fit neatly into our traditional calendar may feel as if they are in disarray.

This crisis has not only upset every element of the retail value chain but also affected consumer behavior in ways that are yet to be fully understood. We know that the product currently piling up will impact both current and upcoming seasons. But nobody can predict exactly how. We know retailers are facing a new reality, but it’s impossible to predict precisely what that looks like. Nevertheless, we must plan future buys and seasons. And we must do this knowing our existing inputs, methodologies, and historical approaches are broken.

This chapter of our Retail Restart Playbook will focus on regaining control over your product-to-market processes. This will not be as simple as going back to doing things the way they have always been done but will demand significantly more open communication and harmonized decision making.

Retailers and vendors have quickly adopted new ways of working during these last few difficult weeks. Their response to the crisis has shown that it is possible to make dramatic changes to processes instead of the incremental adaptations of the last few years. This is a chance for retailers and brands to change behaviors permanently and embrace a new model that has the potential to drive sustainable performance and profitability long into the future.

How can retailers use this situation as an opportunity to bring agility and cohesion into their product-to-market process? There are three major steps to doing so:

Break down silos among teams: To make faster and better decisions, internal teams will need to work collaboratively as one unit to develop their assortment and materials management strategies:

  • Assemble small, nimble teams that include merchandising, sourcing, design, and product development input to identify leftover product to carry forward as well as any assortment gaps.
  • Develop one unified plan that incorporates these and other inputs from planning and finance teams to leverage excess product and materials that are readily available from vendors and in warehouses.
  • Challenge design and product development teams to utilize existing materials in future designs.
  • Align team incentives and metrics to focus on profit improvement and efficiency. Retailers must set new guardrails and targets around development costs and expenses. Improved communication, quicker decisions, and digital product review tools will be needed to reduce sample iterations and costs.
  • Allow rightful owners of individual steps to make quicker decisions and reduce touchpoints that have until now been deemed necessary.
  • Eliminate major approval milestones that are forced to include all levels, such as line reviews.

Embrace speed and set up to react quickly: The supply chain is still recovering, and customer preferences will likely continue to fluctuate. This will lead to inconsistency in the penetration of product categories and sales channels, which makes it risky to make large inventory bets too far out into the future:

Leverage multiple product development models to reduce the risk of being wrong and build flexibility into product-to-market processes. As consumer preferences continue to shift, leverage speed models to launch smaller capsules that incorporate new learnings instead of the traditional large bets on seasonal product.

  • Strengthen vendor relationships—or rebuild them if they have been subject to late payments and other challenges—and empower vendors that have taken on a much more active role during the current crisis. Going forward, retailers should identify key partners from within this group and delegate certain decisions to them. Deepen integration with trusted strategic partners in areas such as materials management, product development, and fitting. While doing so, clearly define and communicate these new accountabilities.
  • Embrace the new normal of increased digitization in the product-to-market process and aim to make a complete and permanent transition to digital design and fit tools. Work with external partners to launch digital design capabilities fast.
  • Embed test, read, and react capabilities in decisions. Relying on past purchase behaviors has been outmoded overnight. Test riskier products online for early reads and react with deeper buys both for ecommerce and for in-store sales.

Accelerate the use of insights: Consumers’ expectations and purchasing behaviors are changing almost daily. This means that retailers need to both recognize these quickly and turn learnings into actions:

  • Understand real-time customer purchase behavior shifts and preferences according to key design attributes such as styling, fabric, print, color, and pricing.
  • Ensure that insights from ecommerce and consumer teams flow into merchandising and design teams in real time. Develop processes to assess and integrate these insights into development.
  • Embrace centralized dashboards to make information readily accessible as almost entire workforces continue to work from home. Abandon multiple reports and instead input critical metrics and key performance indicators into common dashboards to drive efficiency.
  • Adopt one version of the truth. Share dashboards across relevant teams in the organization to ensure transparency, especially as the workforce is dispersed and teams are unable to physically confirm data.
  • Modify key metrics to accommodate changes in the business. Since ecommerce has lower margins than in-store sales, focus on adjusted gross margin to reflect this and build these changed expectations into development goals.

The crisis has been catastrophic in more ways than one. But how retail responds to it holds the potential to fix some of the industry’s longstanding problems and habits. Next week, we will focus on questions around sourcing and category profits.