The McKinsey and Company had helped the US apparel in racking their brains over various important questions for apparels’ sale, price and the clearance sale. The McKinsey and company partners Maura Goldrick, Jason Cherok and Brian Ruwadi had helped them in thinking through numerous occasions, while sorting out the price of their inventory effectively and improving margins.
The problems faced by apparel retailers:-
The clothing inventory that is bought by them is booked and decided in advance for about a time period of six to nine months. The retailers then set them for sale on the racks for customers, while it is accompanied with several problems too.
These problems include change in the requirement according to the season and change in fashion and taste of the customers with new trends. For catering the problems typically a team of McKinsey and company is set up for training the client in adjusting to the new capability.
This is effectively done by McKinsey and Company through analytics and tools with the markdown Advisor on an enterprise system from Periscope. However, there was a lockdown declared in March in the wake of covid-19 and non-essential stores were closed.
The retailers had to see new problems faced as their entire sales depended on one online channel while shifting from their great divisions of sales. The client discussions held with McKinsey and Company mainly highlighted the problems like how to estimate each customer’s cash position.
They were also concerned about the future to be the same reality, which way to pay rent and the starting point in this environment. The difficulty increased even more as the employees were for the first time working remotely. The retailers faced difficulty while innovating and running the organization normally.
The solution and ways the teams of McKinsey and Company came with:-
The team foremost started with a working model for having a rapid and scalable way to deploy similar analytics, while delivering insights in a shorter time as much as three weeks. The team further dispersed into an interdisciplinary team and central group with more than 10 engineers, translators and data scientists.
This led to a remarkable result for an analytics engine built by the central team innovatively on the Periscope platform while leveraging logic much from Markdown Advisor but in speed.
The team along with the expansion of data and analytics had added data sets from the World Health Organization (WHO) related to sentiments of consumers. This also included projections on potential dates for states to reopen from trusted sources.
The benefits of the new engine developed by the team of McKinsey and Company for the retailers:-
The engine for having accuracy maintains granularity at a store level resulting retailers don’t needing to assume what works in one footprint would work for another. The McKinsey senior partner, Brian, has also stated that there are possibilities for tailoring according to retailer’s unique locations, products, market segments and channels.
This could now be done through a huge body of industry data which also comprises of Covid information. The clients now can avail two perspectives from the platform with an overall baseline understanding of inventory.
It could also be done with a view of the pandemic along scenarios which are store specific for different timeline of recovery, impacting the position of inventory. The engine also performs the major and tedious task of initial data crunching, helping out the retailers’ people.