Technological evolution allows consumers to connect with the world through a handheld device, gaining (and providing) access to a wealth of information. Through social media channels, we’re able to instantly share news, pictures, videos and personal preferences.
For consumer product brands, this means that the ability to predict consumer preferences just got a lot easier—and harder—at the same time. The data is right there, but how do we gather and analyze data, and put the insights into action? Figuring this out is key to harnessing preference information and can help consumer product companies develop proactive plans that deliver the right products, at the right time, to buyers that already want them.
Align the Supply Chain to Fit Demand
A recent SAP analysis of more than 175,000 social media mentions around summer fashion trends revealed some interesting insights about preferences for materials, colors, footwear styles and prints around the world. For example, 65 percent of North Americans and 67 percent of people in Europe, the Middle East and Africa noted denim as the preferred material for the upcoming season, while 87 percent of Middle Eastern Europeans favored fur and feathers.
By tapping into global preferences like these, consumer product companies can begin to re-align supply chain strategies to suit consumer preferences, and anticipate the items that may be more popular across different regions.
As companies create products in response to this demand, another opportunity opens up. By correlating social sentiment with historical demand data from POS and syndicated data, brands can focus in on whether or not significant changes in consumer sentiment—positive or negative—contributed to corresponding swings in actual demand.
The comparison findings can be used to identify where to prioritize production and promotional efforts in order to optimize inventory and availability to maximize levels of on-shelf availability and consumer satisfaction.
Improve the Consumer Experience
Harmonizing the supply chain with trending audience preferences can improve the consumer experience by helping to ensure consistency and dependability. But recognizing which products consumers are hungry for is a critical part of creating an in-demand brand.
One easy place to start is to uncover color preferences. In our recent analysis, the data showed metallic as favorable in the Middle East and Europe while reds took precedence in the Greater China region, Asia Pacific and Japan.
Simple insights like these, combined with historical behaviors, can be used to inform long-term planning. And, because social data can be gathered continuously, if color and style variations change to no longer align with long-term demand and supply plans, companies have an opportunity to make adjustments to product innovations.
Build on Existing Supply Chain Tools
Using consumer preferences gathered from social media combined with historical data from supply chain management systems can help consumer product companies better optimize raw materials, logistics and even staffing.
For example, the social media analysis revealed that athletic shoes had 18,981 mentions worldwide, while leather shoes had about half as many mentions. Comparing the frequency of mentions with ongoing demand for corresponding items can point to emerging materials trends that can help support tactical decisions and optimize supply planning, short-term forecasting and inventory management across the globe.
With this level of insight, consumer products companies can make other strategic improvements, such as aligning regionally popular items with the correct distribution centers, planning logistics and shipping details and even staffing based on specific distribution center and retail needs.
Switzerland-based fast fashion brand TALLY WEiJL leverages SAP merchandising and supply chain management solutions to consolidate all its performance data and automate the planning process, all of which has played a part in the brand’s average annual growth rate of 30 percent. With nearly 800 stores across the world, customizing for regions is top of mind.
By tapping into social sentiment data, consumer product companies and fashion brands like TALLY WEiJL can add to the historical demand data and syndicated data they already rely on. Correlating trending keywords and other indicators of sentiment with available inventory and actual demand for key products in each region can give fast fashion brands an early warning system to spot and address potential issues and prioritize how and where to focus to meet regional or seasonal demands. This ability to meet consumer demands as they change is a key growth driver for all progressive brands.
Because preferences constantly evolve, it can be difficult for consumer products companies to keep up with trends. For example, floral prints blossomed on the runway spring of 2013; today, only about 18 percent of North Americans are mentioning floral prints. Consumer products companies that ignore the buzz around hot trends and simply push products out to consumers may be missing huge opportunities.
Similarly, brands that neglect to pay attention to consumer reactions may find themselves as the targets of negativity in social channels. For example, before Target launched its Lilly Pulitzer partnership, we can assume that marketers researched the audience and sought out a trend that coordinated to its customers’ needs. It seems that Target did not, however, anticipate the degree of the purchase response—which is something brands should be equally equipped to handle.
By analyzing consumer social media conversations around a previous campaign (such as the Missoni for Target line) and correlating this with actual Missoni for Target sales, Target might have been able to predict the spike in demand for the Lilly Pulitzer line and fine tune its marketing and inventory availability (nationally, or based on each region’s behaviors) to match.
With the right insights, supply chains are able to get ahead of opportunities to deliver product that’s already in demand and maximize revenue by optimizing all stages of the supply chain.
While harmonizing the supply chain to deliver on fashion trends based on social media analytics may feel like charging into unfamiliar territory, it’s a real-time insight into what consumers are thinking and feeling aligned in real-time to what they’re actually buying (or not buying). Understanding what shoppers like, don’t like and what they’re looking for can add an increasingly valuable dimension of demand analysis to the distribution process, inventory management, expenses and growth; a win-win for all.
As the Global Lead, Industry Marketing for Consumer Products with SAP, Mark Osborn has responsibility for the SAP Consumer Products marketing portfolio including strategic planning, global positioning and messaging, analyst and media relations, digital marketing and global go-to-market enablement for thought leadership, awareness and demand generation. Prior to SAP, Mark served in other executive roles in software solution management, marketing, development and professional services. He has a B.A. in History and English Literature from Washington University in St. Louis, and an M.B.A. in Management Information Systems and Marketing from the University of Minnesota’s Carlson School of Management.