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The Role of Merchandising and Trend Forecasting

January 20, 2016
Merchandising and Trend Forecasting
Why Merchandising and Trend Forecasting?

Today we want to focus on two essential functions in the Fashion or Luxury product chain: Merchandising and Trend Forecasting. First comes always the design idea, but before the actual product can be marketed and sold, it needs to go through the process of being finalized in the merchandising and forecasting department. What exactly do these two departments do usually?

Merchandising

Merchandising and Trend Forecasting

Merchandising in a fashion sense (for other products like cars, yachts, jewellery it can be similar but is usually a little bit different) is all about the final product. Working together with the designers the two main functions of merchandisers are buying, sourcing and logistics.

  1. Buying – The merchandisers work closely with the store managers and decide what kind of product and how much should go to each individual store to supply the sales people with stock to work with. Making sure that each sales point always has exactly what the customers demand for that particular season, they do this by taking into accord past economic performance, pre-existing stock and reports they get from trend forecasters and sales staff. When working with whole-sellers, these people make sure that margins are respected and pop-up stores represent the brand identity correctly. They will also help PR people re-stock their showrooms.
  2. Sourcing – These merchandisers venture out to remote countries and production facilities to negotiate contracts for raw material supply, scout the newest fabrics or rare metals, compare prices and give feedback to the designers so as what to focus on for the next collection. This  happens usually one or two seasons in advance.
  3. Logistics – The last important role for the merchandisers is to make sure that the routes of transportation between sourcing countries, production locations and shops are always free of barriers, used efficient and that a steady flow of product is always insured. They do this by working logistic service providers, insurance companies and customs ministries in the individual countries. If an expensive piece of jewellery is given out to a celebrity for a gala or showcased at an exhibition, these guys will also usually organize proper security and handling of the merchandise.
Trend forecasting
Merchandising and Trend Forecasting

H&M Roskilde Festival

The job of the trend forecaster in every consumer demand driven industry is crucial. These special agents of the brand will usually spend most of their time scouting the market, “listening” to consumers and sales people and feel out what the next big developments in pop culture, art or music could be. They will often be at fashion shows, trade fairs, art exhibitions etc. and always try to stay one step ahead of the general public. They will then compile reports (the forecasts) for coming seasons and give these as early as possible to the merchandisers and designers, so they can create collections that reflect the pulse of what is going on right now. Here a little cheat sheet of what these people usually look out for:

  • Competitor collections
  • Technological developments
  • Fashion and Tradeshows
  • Art Exhibitions
  • Festivals
  • Upcoming trends and movements in the music industry
  • How celebrities dress (the “trendsetters”)
  • Urban subcultures
  • Popular topics in the media
  • What product bloggers (style bloggers) write about
  • Which fabrics, cuts and patterns are gonna be popular and readily available
Where it all comes together – The Product Lifecycle

Merchandising and Trend Forecasting

The forecaster will make recommendations to the merchandisers and designers. They in return will collaborate about what is needed in terms of sales and stock for the next season (what truly “sells”) and the designers will get to work. Once the design is finished it will go into (mass) production with the help of the sourced raw materials that are bought usually overseas or domestically for a reduced price. Once the collections are produced the buyers will distribute the stock according to the needs of the different stores. The marketing and public relations professionals will parallel to this process create appealing advertising and engaging content to drive sales for this new collection. When the new collection finally hits the shelves and is uploaded to the eCommerce store or app, the marketing campaigns will be already running and sales staff will be informed and ready. Before that whole cycle for the new collection is finished, the forecasters will venture out and start the whole thing anew for the upcoming season.

This cycle will usually happen multiple times a year, depending on the type of product and industry (the longevity of the product). Fashion will often have 2-6 collections (including cruise collections) a year while jewellery and tends to have between 1-2. For cars, yachts and more costly luxury products, the cycle can be even slower since they have a much longer shelf life and are more costly to produce in the first place. If you apply this simple model to your industry of preference, it will enable you to understand the inner workings of the Fashion and Luxury world much better.

*The image in the header is a Zara store in the Netherlands.

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