Making the right moves with inventory planning
Inventory is one of the most significant investments that a retailer makes, and, in many cases, this investment is a bet – will their offering be successful or not? The costs involved in placing those inventory chips in the wrong place is substantial, so retailers are trying to get smarter about understanding where products are likely to sell and why – in order to deal with the uncertainty inherent in today’s retail environment.
This requires retailers to be more reactive to changes they are seeing, which in turn places more pressure on the people, processes and systems that are programmed to function on models from the last century. The new retail market requires an entirely new approach – one that embraces and understands the unpredictability of local merchandise demand.
There are two main areas that retailers should focus on right now:
Assortment planning and sku rationalization //
Looking forward in time and planning how to bring inventory into the business based on localized customer demand is essential in deciding how to rationalize a retail assortment. When a retailer can track customer needs in real-time, they can keep their assortments flexible to monitor the profitability and performance of each product. In time, each store will reveal its own patterns and tell the retailer how to best align with the specific needs of customers.
Localizing inventory //
The customer is the most important element of today’s retail strategies. In order to compete in today’s market – retailers of all verticals need to focus on availability and local consumer behaviors. This kind of granular detail cannot be obtained with traditional, data aggregating systems. Retailers need to remove the simplification from their inventory planning process and focus on real-time local demand. This means creating an agile inventory plan that is highly reactive to local demand fluctuations, allowing the retailer to be flexible and respond to how their customers are behaving now. This allows the customer to have product availability when and where they want it, in the right size, the right color, and the right pack – in every store, any where.
