Knowledge is Power for The North Face Stacey Kusterbeck
By knowing a store's top-selling items, sales reps can work with a retailer to adjust an upcoming buy. If they know the retailer has a shortfall in inventory, product can be offered to boost sales. And if sales aren't doing as well as expected, an informed rep can work with the retailer to make some changes to the merchandising of floors.
These are just some of the ways that The North Face, an outdoor retailer based in San Leandro, CA, is using data obtained from its new business intelligence solution.
"It allows us to think like a retailer. It has changed all aspects of the way our company does business in relation to sell-through analysis," says Sarah Jones, manager of retail floor space management. "The goal is to be the best possible business partner to our wholesale dealers."
The company has 23 of its own retail stores, but also has wholesale accounts with both large retailers such as REI and Dick's Sporting Goods, and specialty stores such as Hudson Trail Outfitters and City Sports.
The North Face (named for the coldest, most unforgiving side of a mountain) was founded in 1968 by two hiking enthusiasts in San Francisco, designing and manufacturing their own brand of technical mountaineering apparel and equipment. Skiwear was added in the 1980s; in the 1990s, trekking and trail-running shoes were introduced. Today, the firm's Tekware sportswear collection gives its customers - rock climbers, backpackers, hikers, trail runners and outdoor enthusiasts - functional clothing with the best possible fit.
Information was lacking
While The North Face knew how sales were doing in its own retail stores, it didn't have much insight into its wholesale accounts.
This was partly because the business intelligence solutions on the market weren't really developed with small outdoor retailers in mind. "They were geared more toward department stores - the Macy's of the world," says Jones. "We wanted to dive into that wealth of information that we knew was sitting out there. We just hadn't tapped into it yet."
The North Face's limited distribution model was another reason that a business intelligence solution was needed. "It was apparent to us that if we wanted to grow within the retailers that we currently do business with, we really needed to understand our business better," says Jones.
Jones researched many different business intelligence solutions, primarily by talking with other companies about their experiences. One of those companies was REI, one of The North Face's major retailers, which was using a data-reporting web site run by PivotLink. After seeing how much information was available and how it could be used, the company chose to go with the same vendor.
One reason was the flexibility it offered: The North Face works with many different companies, all providing different formats and metrics. "We are pretty unique because we are a wholesaler looking at our retail sales, whereas most people who work with them are retailers," says Jones. "It was not an easy fit, and other BI solutions were not able to accommodate us."
After the contract was signed, the implementation and training took only six to eight weeks and overall, went very smoothly. Jones says the only thing she would have done differently was to dig a little deeper with the sales reps for the specific data that they truly needed. She wound up adding in a few metrics after the system was up and running.
Some processes had to be altered to allow data to be loaded smoothly and efficiently, and also, to get data in the correct format. "When we first started using it, we just weren't sure how everything was going to interface," says Jones. "We just needed some little tweaks on the back end."
Data is put to good use
Because the company's Retail Development & Design department now has a better idea of how its wholesale vendors are doing, "more relevant product at more relevant price points" can be produced, says Jones.
The North Face now knows what it's selling by style, region and account classification. All that data is put in the hands of the people who can use it most effectively - its sales reps.
"Our sales reps can now say: 'This is my retailer, I know what they are selling to the consumer, I know if they are having problems on the sales floor. And if they are short of inventory, I need to chase some product and make sure their floors are as full as possible,'" says Jones. "It opens up a dialogue that we didn't have before."
If the sales rep knows that inventory is short on a particular backpack style before back-to-school season, he or she can look at what is available in the DC, and offer that additional product to fill the hole. Or, if at the end of the last season, a certain store was lower in its inventory position than it wanted to be, the rep can say: "What if we up your buy going into the next selling season to make sure we don't have that same problem?"
Likewise, if the rep is aware that sales at a particular store aren't what they should be, he or she can address this when sitting down with the account rep, suggesting, for example, that the retailer puts its open-to-buy dollars elsewhere, says Jones.
Many metrics are tracked
The North Face now tracks "every retail metric you can think of," says Jones, including units, dollars, gross margins, turns and sell-through percentages. (The company also uses a solution from Edifice to analyze sell-through.) This allows the company to understand the business better, and has also resulted in increased productivity in many different areas across the board, she says.
For example, the company can see which products are selling in the Northwest, the trends that are having an impact and those that are not. If $129 price-point fleece is selling like gangbusters, The North Face can "then develop a fleece piece to fill that niche," she says.
Previously, The North Face lacked that level of insight into retail-floor trends. "Even though we had conversations with the retailers, a lot of it was anecdotal. And while that's an important piece of the analysis, we now have actual numbers to support that," says Jones.
When the PivotLink solution was first implemented, only a handful of retailers participated, sometimes because their systems didn't allow for the necessary data to be extracted, while others weren't willing to share the information. But the number has grown steadily, with an additional retailer coming on board every few months. "We do want to work with more of our retailers, but the companies we do work with cover the full range of our business model - small and large retailers across all regions," says Jones. "It is a really great subset of our customer base that we are working with."
Currently, the company is tracking additional sales metrics, including average dollar and aged inventory, to help it better understand its position on the retail floor and how this will impact the upcoming buying season.
"In the beginning, it was a little overwhelming - we had so much information and asked ourselves: 'What do we do with it all?'" says Jones. "Now we're in the next phase - and we are able to take a deeper dive into the data."
Stacey Kusterbeck is an Apparel contributing author based in New York.
fast facts
Founded: 1968 Headquarters: San Leandro, CA Parent Company: VF Corp. Number of retail stores: 23
Target market: Climbers, mountaineers, snow-sport athletes, endurance athletes and explorers
