Is retail an art? Or is it science? Or perhaps a combination of the two? First the merchants and planners endeavor to create the most compelling assortments at the right price points as well as sales forecasts to determine appropriate inventory levels and purchasing needs — followed by supply chain and logistics strategies to get goods to the stores in the most efficient manner. All of this is managed with a high degree of precision. Retailers are implementing merchandise management solutions to optimize assortments and pricing. Warehouse and transportation management systems ensure the flow of product into the stores is accurate and timely.

But what happens when the merchandise arrives in the store?

Granted, just about every retailer has a process for planograms and promotional sets. There are standards (created by the visual merchandising teams) that specify exactly how that wonderful assortment is to be presented to the end consumer. However,  unless the store executes their part of the last “100 feet,” those plans will inevitably fail to meet their full potential.

Unfortunately for most retailers, the concepts that serve them so well in their distribution centers break down once the inventory reaches the stores.

The shipment is received into the store, and the quantities on the invoice are simply added to the store’s perpetual inventory as if the product was all consolidated in a single location within the store. We all know that’s rarely ever the case. We are not suggesting that a store ever be able to reach the levels of accuracy enjoyed by distribution centers — where nothing moves without specific directives (from receipt to shipment), but we are suggesting that continuing to ignore the lack of precision is a recipe for disaster as the lines continue to blur between consumer purchasing channels.

Odds are, the accuracy of inventory in your store is hovering around 60%. This means that nearly half of the products in your stores are suffering from the lack of precision that ultimately snowballs into a host of much bigger issues:

  • When you walk the store and see empty shelves
  • When you realize your inventory levels are inching up and gross margins are declining
  • When your store labor can’t keep up with the flow of merchandise entering the store
  • When shrink is on the rise

These are all symptoms of a singular issue — the accuracy of your store inventory is at the root of all these issues.

Furthermore, the main culprit is typically the store operator – not because they don’t care or aren’t trying – but because they lack the process and technological support to improve execution.

Consider this: you probably ask your store leaders to periodically walk every inch of the store and record out of stocks — often with a scanner. Faced with an out, the operator is likely also presented with a decision (assuming the handheld device they are carrying supports the transaction) — “zero out” the item (i.e., adjust the quantity to nothing) — or go on a scavenger hunt to try to find it. What happens when the adjustment is made? Well, if it’s replenishable merchandise, more will get ordered. Now the store has even more of something coming that — because it’s out on the shelf — you really don’t even know how quickly it will sell. To make matters worse, the back rooms of these stores begin to pile up with the excess inventory — and the store staff can’t keep up to get the shelves properly stocked and aligned with the planogram.

Now, let’s really pile on with the challenges — in an effort to keep up (and stay productive) — the store stockers may be forced to make some choices about the inventory that is in front of them in a box on the sales floor — because a full shelf is certainly more appealing than an empty one — they “spread to fill” — and there goes the integrity of the planogram. And efficient online order fulfillment? Small chance of success. If this sounds familiar, you’re not alone.

There is a better way.

Designing and establishing streamlined processes that incorporate the practices of world-class retailers as well as support your brand’s overall value proposition, coupled with implementing supporting technologies are vital to the long-term success of the store’s role in your omnichannel strategy. Your stores will look better, your staff will be more productive and happier, and your customers will undoubtedly reward you in spades with repeat business and loyalty.

Understanding and prioritizing these key initiatives into an actionable roadmap will enable you to gain true control over your store inventory – a critical objective in ensuring your ability to compete in the modern retail environment.

If you recognize any of the symptoms we’ve talked about, please don’t hesitate to contact us and let us help you understand how to begin your journey to achieving true omnichannel inventory management excellence – beginning in your stores.

– Rob

Published On: September 10, 2015Categories: Inventory Optimization, Omnichannel, Rob Oglesby, Store Operations