Know the Risk: Digital Transformation's Impact on Your Business-Critical Applications REGISTER >
Mackey McDonald likes to talk about filling in the "white spaces" on the product mapthe uncharted places where VF can introduce or acquire new lines that tap into consumer desires VF does not yet meet. "That's why we acquired Vans, to reach young consumers," he says. "We were under-penetrated in that market." Customers around the world are looking for products that suit their self-image and differentiate them from the crowd, whether that crowd is in South Dakota or South Africa. "It's lifestyle segmentation, not geographic segmentation," McDonald says.
At the same time, particular customers want products that meet specific needs. Market research showed that men who wear jeans to work, for example, prefer heavier denim and reinforced pockets, so VF created Riggs Workwear by Wrangler, a new brand for the workplace. "The ability to have consumer information is a key to filling in the white spaces," McDonald says.
Pat Garvey is an explorer of those white spaces. The project leader of the common systems sales chain, he works closely with the domestic operations of big retailers such as Wal-Mart, Target Corp. and Kmart Corp. to manage their inventories of VF products, and to gather data that can help VF understand what customers around the world want to wear next. VF helps the chains with sales planning and replenishment, down to the level of individual garment styles and colors in particular departments across the chains, and even runs replenishment for some of the largest companies. "We plan our business the way they plan theirs, using their calendar and their metrics," says Garvey.
The Next Global Stage: Challenges and Opportunities in Our Borderless World
Wharton School Publishing, 2005
Cultural Intelligence: Individual Interactions Across Cultures
P. Christopher Earley and Soon Ang
Stanford University Press, 2003
Using sales planning software from JDA Software Group and proprietary dynamic modeling software, supported by the back-end ERP system at the coalitions, VF is able to keep inventories lean but well-matched to customer demand. The company can even analyze patterns at particular stores, factor in the demographics of an area, and plan accordingly at other stores that serve similar populations. Getting good, clean data can be a struggle, particularly from retailers that don't work as closely with VF's own systems. But the payoff comes in ways beyond efficiency. "We are learning to leverage what we learn across our divisions," says Garvey. "It's fairly early in the game, but we're looking to get as much consumer-specific data as we can, to understand the consumer down to sub-brand level."
That kind of knowledge, combined with a supply chain that can source and stock goods efficiently around the world, is intended to let VF continue to fill in the white spaces on its product chart and its map of the globe. It's a design for growth that should stay in fashion for years to come.