Giving the customer what they want has been a pillar of retail since day one, but that doesn’t mean the industry is getting better at it. Quite the contrary; in today’s complicated trading environment, many retailers find it harder than ever to deliver exceptional customer service.
One major reason for this is outdated inventory management strategies. Retail organizations simply don’t have sufficient clarity to get the goods to the customer in the quickest way possible, whilst still optimizing profit. It’s a battleground where those who get their strategy right can reap rich rewards in 2016.
Ahead of our upcoming webinar with the BRC: how to boost store performance, we’ve delved into the issue of inventory management to highlight 4 key obstacles that stand between retailers and the ability to consistently meet customer demands.
- There’s no single version of the truth For all the talk of providing a seamless omnichannel customer experience at the front end, operationally, most retailers are still working in a siloed fashion. This means that they are using multiple systems for managing stock in each channel, and as a result they don’t have a single, 360 overview of exactly what’s happening across their entire business.Because of this, they experience scenarios in which inventory runs out in one location, but they can’t see that surplus stock is available at another, therefore losing the sale. In addition, stock tends to be allocated on a first come, first served basis within each channel, which can result in less profitable fulfilment decisions being made because they don’t have an all-channel perspective of customer demand.
- More channels = greater overstocking As the retail model increases in complexity, retailers have to predict and prepare for new ‘what if?’ scenarios. Within inventory management, this means building in an element of safety stock should sales forecasts prove inaccurate, to ensure shoppers aren’t left empty handed.If a retailer can’t view their complete stock availability across the network then each channel must have its own safety stock to avoid running out – and the more channels added, the greater that stock pile becomes.A study by Martec International revealed that retailers add an average 0.4 channels each year, and that inventory inefficiencies can lead to safety stock margins being 20% higher than necessary. Therefore retail businesses need to focus on opening their communications channels to meet customer demand through collaboration.
- Online gets the lion’s share In the immediate world of online shopping, a retailer’s greatest fear is product unavailability. Without a single stock view, they may err on the side of caution and allocate a greater volume of inventory to digital sales than bricks-and-mortar touchpoints. It’s equivalent to overstocking new stores for the first six months of operation.Businesses may be able to cope this way on a day-to-day basis, but factors like marketing promotions can really upset the balance across channels, leading to many disappointed customers in stores. This not only deflates customer satisfaction at that moment in time; but also permanently impact a shopper’s relationship with a retail brand.
- Returns aren’t pulling their weight If a retailer lacks full visibility of new stock, chances are they are some distance away from being able to reduce lost margin on products coming back into the system.In today’s multi-channel environment, it’s highly likely that items being sent back arrive in a different channel or location from which they originated. Without a single stock view, retailers cannot track either that journey, or the most profitable place to reallocate an unwanted purchase.
By synchronizing activity across the business, retail decision makers can analyze inventory levels at both store/channel level and across their entire network, moving stock to the most suitable position based on customer demand.
Boosting store performance: how to drive higher sales using a single view of stock is an exclusive webinar with the British Retail Consortium, Retail Connections and iVend Retail.
Taking place on Wednesday 17th February at 1:00 – 1:30 pm, book your place now to discover how the store can increase its share of sales over the next 12 months.