The definition of insanity has never been more important to avoid:
“Doing the same thing but expecting a different result.”
Given the current state of consumer’s actions, retailers are scrambling to understand the impacts on channel sales, inventory recovery, and supply chains now and for the future. Consumers are facing unchartered territory as much as retailers. The desire to spend is suppressed by lay-offs and uncertainty for their future. For most retailers, there is no data that matches this environment, and there is not much chance to get forecasts right for the future without changing something.
The race to deploy omni-channel capabilities like buy-online-pickup-in-store (BOPIS) and buy-online-return-in-store (BORIS) has been the latest shift for retailers. However, these capabilities now come with additional considerations for recovery. Despite the growing percentage of online commerce, most business is still done facing the customers, on the ground, in the stores—at least before COVID-19.
The way you respond in these unthinkable times will surely determine the future of your business, your employees, and your financial recovery. The idea of getting back to “the new normal” is both exciting and causes significant trepidation.
Retailers’ typical approach, whether using a sophisticated software system or not, will likely be more successful “blending art with science.” Here are some examples of ways to do that:
Use your people. Given an unprecedented time, the call to action has never been louder. Leadership: now-more than ever—is the time to make this clear. Employees are extremely loyal and want to be a part of the solution. Additionally, your employees drive a substantial portion of the “art” in this equation. The knowledge they have of the business, the items in your assortment, and the stores is crucial in solving a viable, quick and impactful solution. Your people know the systems and spreadsheets, how to fine tune them, and how to translate a company’s vision and strategy. Don’t assume anything, communicate goals, ideas, and strategies often and clearly. If we’ve learned anything in this crisis, we are in this together.
Understand your inventory. Where is it? How to manage your inventory now and in the future? Having a single view of total inventory is key. Understanding where the inventory is in the supply chain is crucial to proactively mitigating risks. While today may not represent “normal operations,” evaluate current on hands and weeks on hand across the various channels and consider how to best fulfill outages with overstocks located elsewhere if supply is constrained. Strategize incoming orders to maximize sales opportunity but keep in mind the unknown future liability. Did some stores close, forcing sales to other channels or stores that will likely not occur in the future? Consideration of seasonal items and everyday basics should have a different strategy anyway, so should that strategy change now, temporarily at least? Retail has never been a black and white world—but is now grayer than ever. Here again is “art”—thinking differently, driving systems and strategies down a new, probably unchartered path, all along using the science to the fullest extent.
Predict the future. What will the demand be? When will the stores reopen/recover? How do you execute most profitably? You’ve heard the term “peanut butter” approach, and this is not the time for a one size fits all. Dig into the data, use your people and your intelligent systems to identify anomalies. Fine-tune, cleanse, and learn to trust the data. Likely unplanned strategies will have to be deployed to move through non-sellable inventory, making room for new, seasonally-right incoming inventory. Having a plan will allow the execution of each order to be deployed through allocation and replenishment to support the strategy. Additionally, the steps you take for recovery will be instrumental in supporting the retail planning process for the years to come.
Those retailers who have already enabled technology that can help drive data into decision points will be ahead of the curve for sure. Systems that enable sophisticated settings, like service level goals and safety stocks certainly will help. Retail forecasts that are supported by artificial intelligence (AI), and machine learning (ML) are a big part of the “science.” However, without the “art” (your people’s knowledge and forward-thinking strategy of how to approach or fine-tune results) the definition of insanity prevails.
Above all, The Parker Avery Group is here to help. If you have any questions about how to move forward in this uncertain world or just want to toss around some ideas over the phone, please reach out.
Image by Gerd Altmann from Pixabay