Department stores and wholesale trading are at a turning point. Retailers have a choice: Either risk becoming a casualty of ongoing inventory inaccuracies or join the heritage brands, like Ralph Lauren and David Jones, pioneering the digital merchandising transformation.
As consumer demand patterns have grown more complex, the slow adoption of intelligent merchandising software from legacy wholesale retailers has prevented efficient buying and planning for years, a factor contributing to fashion’s biggest problems. The retail industry’s inventory glut is its worst-kept secret, with inventory distortion – buying too much or too little stock – becoming a trillion-dollar global issue last year, costing $1.2 trillion from out-of-stocks and $554 billion from overstocks. This has caused the proportion of discounted products to rise by five percentage points year-over-year in the US alone.
“How much longer can we survive the pendulum swings between under- and over-buying and not actually fix the problem?” Michaela Wessels, CEO of Style Arcade, posed to Inside Retail. “The problem is a lack of buying accuracy and the inability to predict accurate order quantities by size.”
Data-led collaboration for wholesale growth
Launched in 2018, Style Arcade is the buying and merchandising platform behind some of fashion’s biggest names – including Princess Polly, Tibi, Amiri and Ksubi. The software uses algorithms and AI to drive recommendations on how much to order of every product in every size, allowing retailers to automate expertise in buying and sizing to maximize profitability.
Currently, multi-brand stores face significant challenges in channel visibility and cross-team coordination, primarily due to their limited access to real-time sell-through data, which leads to inefficient and costly response times for both fast and slow sellers.
“Our philosophy was to fundamentally solve two of the industry’s key issues: First, to stop buying errors at the source – which is at the size level – and second, to solve the disconnect between brands and retailers, enabling them to collaborate and trade more effectively together,” Wessels shared.
Trading for 187 years, Australian department store David Jones has embraced the technology shift, announcing a three-year $65 million investment in technology transformation. With Style Arcade, it sees an opportunity to move its gross margin by significant basis points. The luxury retailer can now match supply with demand, and connect, manage, and share data across all channels, including wholesale sell-through data, which can make up a critical amount of business revenue.
Luxury fashion leader Ralph Lauren approached Style Arcade with the goal of complete visibility across its wholesale channels to increase alignment with Australian market demands. With the platform, the team now has access to streamlined analytics for the entire wholesale business, including David Jones.
“Retailers are connecting the dots, understanding that being on the same platform, between brand and retailer, means the visibility to trade better and predict the buying patterns far closer to market,” Wessels said.
Efficiency is the new growth lever
“If filling landfills with unsold products is not enough to move a brand or retailer to action, certainly the fact that most brands are losing almost 25 per cent of their gross margin to the problem is a reason in itself,” Wessels added.
The results speak for themselves, with Style Arcade now driving growth for many of Australia’s most iconic retailers, and rapidly expanding its footprint across over 21 countries worldwide, including some of the most influential brands in the US, Europe, and Oceania. By optimizing pre-season planning, in-season trading, and post-season analysis, the platform doesn’t just serve buyers; it provides a single source of truth for the entire team by removing siloed data across dozens of systems.
Intelligent systems should work on the basis of saving teams time spent on manual processes, and Australian label Aje is a proof point for Style Arcade, getting back a day per week (a 20 per cent productivity improvement) by automating assortment planning, and reducing time spent in spreadsheets to enable quicker decision-making.
“We designed the platform for merchandisers, buyers, and planners, but we quickly learned that everyone was using it, including marketing, design, production and e-commerce teams,” Wessels revealed. “Everyone in the team wants to make better, more data-driven product decisions, and they now have access to technology that delivers what spreadsheets and traditional BI tools never could.”
Because the UX is based on the real-world workflows and daily tasks, the speed at which teams can comfortably embrace Style Arcade has influenced the speed at which brands and retailers experience the impact of better product decisions.
“We hear time and again, and we’ve experienced it ourselves, being from the industry, that the problem with spending resources, both cost and time, on the monolithic systems is that they take years to implement and then have low adoption rates, and therefore poor results.
“Style Arcade adoption metrics rival the daily usage patterns of Slack and Microsoft Teams within these brands and retailers – it’s the most widely used application to get their jobs done,” Wessels said.
