The Importance of Inventory Management in Driving Sales
By Jim Lewis, CEO Enhanced Retail Solutions LLC
At a recent webinar I attended, several retail investment researchers talked about their predictions for holiday 2021. Overall, they were bullish, and I don’t disagree. On top of a very strong holiday 2020, they expect 2021 to be up another 8% or so. That will vary greatly by retailer and how prepared they are to meet the consumer’s “friction-free” expectations. That means providing multi-channel shopping experiences, instant or near-instant availability of product, curbside pickup, enriched customer engagement and more.
Many retailers have been focused on getting to that point over the last 18 months. However, they also must have sophisticated sourcing and supply chain capabilities and be fanatical about inventory management.
Integrating Data with Smart Merchandising
There’s no question that AI and all those algorithms Amazon developed help drive sales by connecting the consumer with products they want. But I also firmly believe the role of the buyer/curator is still critical. The data driven approach supplies them with more details so they can improve design and the assortment mix. It can also be applied to how they manage inventory.
- Smart reports are not just numbers on a page. It highlights opportunities and liabilities and provides a recommendation- right there on the report. Here is an example.
- I’m not talking about the old-fashioned auto replenishment systems that department stores used (some still do). Auto-replenishment must be predictive, account for lost sales and more quickly spot trends. Smart retailers rely on their suppliers to do the job for them using VMI (Vendor Managed Inventory). With a supplier laser-focusing on their piece of the pie they can ensure better coverage.
- Live forecasts are constantly updated based on new information and look at multiple data points to derive the more accurate forecast. Integration with retail and wholesale inventories is a must. Like anything else, the more effort you put into it the greater the output will be. Automation is the key.
I’m still surprised how many companies we talk to don’t put the amount of energy into managing inventory that they should. They wonder how they end up with inventory problems- either not enough or too much. We have been able to help many of them. Learn more here.