Introduction

Retailers possess a wealth of data—on their inventory, their customers, and their customers’ purchases and activities, in addition to external data—which can be transformed into actionable business insights.

Many retailers are unable to connect their own data, which deprives their suppliers and business partners, as well as themselves, the multiplicative benefits of combining their data to make better business decisions. These benefits include higher revenues, expanded margins, lower costs, higher inventory turns, more efficient operations and, most importantly, improved customer satisfaction. Moreover, higher efficiency, especially with regard to managing production and inventory, drives improved sustainability.

In this report, we explore three topics surrounding collaboration and data sharing:

• The technological and cultural causes inhibiting data sharing
• How data-sharing benefits everyone in the entire value chain
• How data sharing and collaboration can also enhance sustainability

We also highlight several successful data-sharing and collaboration case studies.

This report is produced in partnership with SKYPAD, a business-to-business (B2B) software-as-a-service (SaaS) platform focused on improving processes between retailers and brands with automated, streamlined reporting technology that enables service levels above and beyond customer expectations.

Market Scale and Opportunity

Having inaccurate or stale data affects retailers and brands, both on the top line and on the bottom line due to the impacts of resulting allocation issues.

A recent Coresight Research survey found that more than 80% of retailers in the US and Canada lose at least 3% of revenues annually due to allocation issues, with 23% reporting that more than 6% of sales are lost. In addition, our survey found that 73% of retailers have excess inventory of more than 5% of total inventory after a selling period, as shown in Figure 1.

These figures are substantial—lost sales of 6% would equate to a total $28.5 billion in lost revenue in the US apparel, footwear and accessories market in 2023 as a result of allocation issues, Coresight Research estimates.

Figure 1. Impact of Allocation Issues on Sales (Left) and Average Excess Inventory (Right)

Totals may not sum to 100 due to rounding
Base: 170 retail industry decision makers in the US and Canada, surveyed in June 2021
Source: Coresight Research

 

How Data Sharing and Collaboration Can Accelerate Decision-Making and Enhance Sustainability: Coresight Research Analysis

By implementing best practices and advanced tools to collaborate and share data, retailers and brands can drive positive impacts across the entire retail value chain, increasing speed to insights and enhancing sustainability.

1. Culture and Legacy Tools Are Causing the Disconnect

Retailers’ cultural and technological issues in handling data create a gulf between them and their suppliers.

The retail industry is highly competitive, and this makes retailers cautious about sharing data with suppliers, partners and other trusted parties. Moreover, retailers and buyers have historically been adequately served by transactional relationships and are typically resistant to change. Even internally, there is often little collaboration (with finance owning transaction data, marketing owning customer data and so on).

Technical barriers also impede retailer-supplier data sharing, including a reliance on legacy tools and a reluctance to modernize. Many retailers still use electronic data interchange (EDI), which has its roots in the 1970s, or portals that require data to be downloaded and translated, which wastes time and prevents the data from being available in real time. In addition, many retailers are still using desktop applications to manage their data: the same Coresight Research survey referenced above found that nearly six in 10 retailers in the US and Canada use spreadsheets or simply their gut for demand forecasting, leading to business decisions that are flawed and untimely.

2. Data Sharing and Collaboration Benefit Everyone in the Value Chain, Including Retailers, Brands, Consumers and Sustainability

Benefits Within the Retail Value Chain

Data sharing among retailers and suppliers offers numerous benefits for nearly all participants in the value chain. Visibility across retailers and suppliers enables them to make optimal business decisions about manufacturing, allocation, inventory, pricing and other tough challenges such as managing returns.

Figure 2. Areas Where Data Sharing and Collaboration Benefit the Retail Value Chain

Source: Coresight Research

 

Facilitating access to relevant data in a timely manner in the correct format can help minimize environmental impacts, according to Gil Hakami, Chief Revenue Officer at SKYPAD. He believes that using a shared reporting platform enables brands and retailers to establish common KPIs (key performance indicators) and cross-functional collaboration. This results in a streamlined selling process, which in turn reduces waste and provides valuable insights at the location and style levels. Managing inventory levels more effectively helps prevent out-of-stocks and, importantly, surplus stock, thereby making supply chains more efficient and sustainable.

Benefits of Speed to Insights

“Speed to insights” refers to the period in which data can be analyzed and transformed into digestible and actionable insights; conversely, delays in generating insights hurt the potential benefits of business decisions and can lead to customer dissatisfaction. Three key factors accelerate speed to insights:

• Ease of use—Having comprehensive, common, simplified data formats eliminates time wasted in accessing online portals and translating data formats, as dashboards can analyze sales performance across factors such as attributes and location. Tools also have to be powerful and easy to use for managers and data scientists alike.
• Single source of truth—Having a common source of data, including sales data, current inventory levels and projections offers a “single source of truth” as the basis for informed business decisions.
• Immediate access to data—Real-time data can power analytics and prediction engines and enable retailers and brands to respond quickly in times of rapid changes in market conditions and consumer demand.

Benefits for Retailers

By sharing their data with brands, retailers can gain access to data on aggregate brand performance and trends, enabling them to make better forecasts and decisions. State-of-the-art data analysis tools empower analysts with visual data representations.

• Understanding consumer and demand trends—By sharing data with brands, retailers gain insights of demand across the entire brand and across the retailer’s store network. For example, Neiman Marcus Group’s use of data sharing helps improve its inventory assortment and allocation, offering its customers the most relevant, curated product assortments, according to the company.
• Reducing inventory volatility—Being able to understand total demand and generate accurate forecasts frees retailers from the revenue-damaging cycle of over-ordering, aggressive discounting and under-ordering in the next season.
• Visualizing data—Combining a retailer’s own sales data with brand-shared data enables the creation of more accurate demand forecasts. Visual representations also enhance data analysis. SKYPAD’s dashboards make it easy to see store-level performance with color-coded heat maps (see image below).

Heatmap visualizing sales for women’s lace-up sneakers for an undisclosed retailer, from low sales (light green) to high sales (dark green)
Source: SKYPAD

 

Meaghan Lynch, Director of Program Management at SKYPAD, believes that the market volatility during the past couple of years has heightened demand for enriched data. “Having easy access to accurate omnichannel sales performance data available within a single, automated reporting platform is critical to ensuring business success,” she said. By leveraging the power of these data sets, brands can gain access to invaluable consumer insights that enhance their relationships with retailers. Timely data sharing creates a win-win situation for both parties, enabling them to offer superior customer service.

Benefits for Brands

Seven in 10 brands benefit from established practices of using data and technology to assist their business decision-making, according to a 2023 study by e-commerce platform Lightspeed. The study also found that 82% of brands use B2B software to assist their wholesale business.

We see three primary benefits to brands of data sharing:

• Access demand and trend data quickly—Rapid access to data spanning a retailer’s customer base enables brands to understand demand trends and optimize production.
• Optimize inventory management—Having an accurate, timely demand forecast enables brands to optimize the following actions.
• Assortment optimization—With an accurate demand forecast in place, brands can allocate assortment among retailers, including online and offline channels. For example, Saks OFF 5th partnered with SKYPAD to manage 800 brands, enabling the retailer to create curated product assortments.
• Hyperlocalization—With accurate data, assortment management can be taken to a highly detailed level whereby it can be optimized on a neighborhood or even store level.
• Accurate sales and demand forecasts—Accurate category data is the key input for demand forecasts, and AI/ML (artificial intelligence/machine learning)-based engines also make use of external data to create highly accurate forecasts. Nordstrom brand Trunk Club offers a personalized product catalog in real time, which drives higher sales and conversion rates.

Personalized product assortment
Source: Nordstrom/Trunk Club

 

Improvements to Customer Satisfaction

Collaboration and data sharing among retailers and brands helps to put the right product in the right store at the right time. This is particularly important against a backdrop of macroeconomic uncertainty (such as during the pandemic) when customers make fewer, targeted shopping trips. Shoppers may leave a store without making a purchase, possibly never to return, if desired or key items are out of stock. In a late-2022 global consumer survey conducted by Zebra Technologies, seven in 10 shoppers reported leaving a store without all the items they wanted.

3. Improved Sustainability Is a Meaningful Benefit from Data Sharing and Collaboration

Improving efficiency often enhances sustainability due to less waste and lower energy consumption—and obtaining real-time product data can reduce overproduction and minimize the likelihood of costly returns.

• Less waste—Better matching inventory and assortment to demand offers several sustainability-related benefits for retailers and brands. First, manufacturing the right quantity of product means less waste and energy usage. Second, getting inventory right means that retailers will need to dispose of fewer excess items at the end of the season, which often end up taking up space in landfills. Some luxury brands have destroyed excess products rather than discounting them to preserve their brand image.
• Reduced carbon emissions—Manufacturing the correct quantity and style of products also means fewer trucks rolling to transport the products from factory to warehouse and to the store or their ultimate destination.
• Fewer returns—Real-time returns data from the consumer can help identify problems with fit or style, which can be used to modify the product’s design or style, mitigating future returns. Reducing returns also reduces the packaging and energy needed to return items, in addition to their impact on landfills.

SKYPAD recognizes that retailers have always been challenged to distribute a consistent set of weekly sales and inventory data to their suppliers. Ali Keech, Director of Retailer Partnerships at the company, explained that brands and retailers can manage their businesses proactively when armed with a self-service, streamlined reporting platform that automates, aggregates and accelerates sell-through data. SKYPAD enables retail companies to analyze door assortment and distribution, identify in-season and incremental opportunities, and create a quantitative retail strategy. This enables the buyer and brand to build stronger relationships to collaboratively manage and grow their respective businesses.

SKYPAD Case Studies

SKYPAD is a web-based reporting suite owned by SKY IT Group, a data analytics group. SKYPAD’s accurate sales performance data and real-time self-serve reporting system enable users to anticipate product needs, discover emerging sales opportunities and react to inventory imbalances quickly. The company aims to connect the global network of retailers and suppliers on a single platform, where actionable insights and consumer trends directly support sustainability goals and maximize business performance.

SKYPAD services 4,000 users from over 200 retailers, 2,000 brands and 30,000 stores across several industry verticals and geographic regions, and its subscribers have reported a 16% average increase in seasonal sales due to accurate insights into consumer buying behavior, according to the company. Today, SKYPAD has exclusive partnerships with various retailers, including Bergdorf Goodman, Cos Bar, Neiman Marcus, Saks Fifth Avenue and Saks OFF 5th.

Below, we present four case studies from SKYPAD to illustrate how companies have increased data sharing and improved retail sales with the platform.

Fashion Brand Theory Wins with Data Sharing

New York fashion brand Theory has used SKYPAD’s sell-through reporting platform to facilitate its internal teams’ data access since 2007, driving decision-making and collaboration with its retailer partners.

As a brand selling through both online and offline channels, Theory found the process of compiling and validating sell-through data from vendor portals labor-intensive and burdensome. It now uses the SKYPAD dashboard to efficiently analyze sales performance on a store-by-store basis. Its sales team can also aggregate data across various selling platforms using multiple variables and performance indicators, such as weekly sales and inventory metrics by retailer at an attribute (style, color, size) level.

Over the past 12 years, SKYPAD has reported on sell-through data from 90% of Theory’s US wholesale retailer partners, and six departments at the company have utilized the platform.

Luxury Brand Balmain Accelerates Global Collaboration

Multimillion-dollar global fashion brand Balmain began using SKYPAD’s data-sharing solutions in the US and EMEA (Europe, Middle East and Africa) markets in 2018 and has been actively using the platform with 12 global partners since 2020.

The brand uses SKYPAD as its sell-through reporting platform, enhancing cross-regional collaboration and increasing profitability, as compared to previously delivering weekly reports to buyers via email in different languages, which were then processed through various portals. SKYPAD’s data collection, validation and reporting process helped the former analyze sell-out activities in three global regions and equip marketers with timely forecasting and actionable insights within Balmain’s established retailer network.

Designer Brand Lela Rose Speeds Up Insights

Designer bridal brand Lela Rose uses SKYPAD’s platform to gain timely visibility into its weekly sales with minimal lag between actual sales and data availability. The brand can now quickly respond to sales trends and maximize in-season opportunities by generating data on sales performance by product attributes (such as style, color and size) and individual store location, across any time range, rather than manually sorting internal selling reports. More importantly, it reduces the risk of markdowns to move inventory, thereby improving profitability.

Premium Menswear Brand Robert Graham Benefits from Data-Driven Intelligence

New York luxury menswear brand Robert Graham partnered with SKYPAD to improve its weekly sales and data sharing across its retail partners. The platform integrates sales data with internal data by style, top 10 bestsellers and stock levels to analyze key trends and minimize discounting. Previously, the sales team had relied on buyers to email sales reports and format the data to fit the internal reporting system.

What We Think

There are numerous, clear benefits for retailers and brands to leave behind their legacy behaviors and technologies for data management (and secrecy) and implement data sharing and collaboration through the retail value chain. These activities can raise revenues, improve efficiency and boost margins, while at the same time improving sustainability, which has become a key theme among consumers and stakeholders in recent years.

Implications for Brands/Retailers

• Brands should gain access to shared data on sales and inventory from retailers on a real-time basis, which they can use to optimize their manufacturing, allocation and assortment decisions.
• By collaborating with their suppliers to share data, retailers can make their own optimal inventory decisions on a timely basis.
• Customer satisfaction is an important outcome of data sharing and collaboration, which helps retailers and brands to put the right product at the right place at the right time, delighting customers.
• Returns are a thorny issue for retailers and brands. Obtaining sales data in real time enables retailers and brands to identify quality or size issues (for example), which helps curtail excess production and improves sustainability.

About Coresight Research Custom Reports

Coresight Research Custom Reports are produced as part of commercial partnerships with leading firms in the retail, technology and startup ecosystems. These Custom Reports present expert analysis and proprietary data on key topics in the retail, technology and related industries, and enable partner companies to communicate their brand and messaging to a wider audience within the context of brand-relevant research.

This Custom Report is sponsored by SKYPAD, a B2B SaaS platform. For more information, visit www.skyitgroup.com.