The omnichannel model is hugely attractive, promising growth via multiple revenue streams, but what are the practical realities of running an omnichannel retail business?
One monumental task is retail inventory control – balancing demand and fulfilment across a plethora of different channels. End customers aren’t the least concerned about the complexities of inventory planning, warehousing and supply chain management; they expect product availability wherever they want to purchase. And increasingly today, the ability to deliver on this promise is what makes a truly successful retailer.
Managing inventory: the single stock pool approach
As omnichannel retailing develops, the retail industry is seeing the benefits of servicing all channels from a single stock pool. With a single stock pool, retailers can expect to see savings in inventory costs, because there will be less need to hold so much ‘safety stock’ – products held in excess of regular sales cycle forecasts, in readiness for unexpected demand.
A single stock pool significantly reduces safety stocks, and can reduce total stockholding by as much as 20%, supply chain experts have found. A further big win for retailers is improved sell-through and lower clearance markdowns and wastage, once inventory is better controlled and centrally managed.
In addition to managing inventory more cost-effectively, moving to a single stock pool model has tangible customer service benefits. When inventory is being managed holistically across channels, the number of out-of-stocks is reduced, as retailers can ensure that availability is closely mapped to the channels in which they are experiencing the greatest demand. This, in turn, ensures valued customers get the item they ordered every time, and receive a consistent level of service, whichever channel they choose to shop in.
Moving to a single stock pool model
For retailers that do not yet operate a single stock pool approach, migrating to this model relies on having the right technology to support a 360 degree inventory view.
The right retail management solutions must be comprehensive enough to encompass all elements of the organisation that need an accurate inventory overview – merchandise planning, range planning, demand forecasting, pre- and post-allocations, warehouse management, imports management, distributed order management, returns management and clearance – all of which need to be fully integrated.
With the best-fit technology in place, the joined up approach and real-time visibility across store estate, warehouses and supply chain can then start to deliver. Demand can be anticipated by channel, in order to notify when stock will be despatched to stores, wholesale customers, franchisees, and so forth; promotions and seasonal peaks can be planned for, channel by channel; and the merchandising team will be empowered to keep a close eye on temporary and permanent stock allocations, redistribute where needed, and make the most profitable use of the inventory.
Optimising availability with retail inventory software
It is clear that moving to a single stock pool has potentially large savings. But perhaps the most compelling reason to adopt this strategy is its ability to deliver long-term customer satisfaction.
In order to nurture shopper loyalty, and grow share across increasingly crowded markets, product availability needs to be a priority for omnichannel retailers. For companies expanding internationally too, there needs to be a central merchandise and range planning process supported by a common planning system.
As an industry we’re learning fast, and a single stock model should be the next iteration in the inventory management curve. Looking ahead, there is comfort in the knowledge that out-of-stocks, over-stocking, lost sales and wastage can be planned out of omnichannel businesses, which is great news for a retailer’s bottom line.
For more support moving to a single stock pool, visit our resource hub for eBooks and video guides.
How to use data to improve customer experience in retail
Ask any retailer and they’ll tell you that an enhanced customer experience is at the top of their ‘must [...]
mPOS – bringing back the human touch to in-store shopping
As shoppers return to brick and mortar stores in their drovers, they crave the in-store experience. Retailers who want [...]
AI in retail – transforming the future of shopping
Artificial Intelligence has become embedded into our everyday lives – every time we ask Alexa for the weather, or [...]