Despite some major overhauls during COVID, particularly in omnichannel order management, there are fundamental breaking points that need to be addressed, such as taking a deep, honest look at existing inventory management processes. The traditional mindset of relying on perpetual inventory to drive in-store restocking activities, as well as allocation and replenishment must be replaced by more efficient ways of handling retail inventory within, to, and from the store. Indeed, this is a change in basic assumptions that many retailers will be reluctant to embrace. However, recent technologies, combined with strategically designed business processes can result in significant labor and retail inventory efficiencies.
In the back of the house, retailers need to closely examine their business, beginning with core merchandising and moving through the supply chain to identify ways to improve efficiencies, promote visibility, and enhance collaboration. Easier said than done, to be sure, but we have seen a lot of recent activity with our clients that have realized the importance of a good foundation as they tried to stand up more advanced capabilities during the pandemic. Inventory visibility across the enterprise became increasingly important to maximize inventory positioning. Retailers must do more with less, so understanding where the inventory is in a timely manner to satisfy customer demand, but doing it profitably is the key to success. This is still a work in progress for many retailers because it is not a light lift, but it is a clear enabler to more advanced capabilities.
Another great recent topic of discussion is a renewed focus on reducing assortment complexity. Many of our clients today have had to make hard choices to balance inventory availability and overall customer offerings. The luxury of being able to have it all has been offset by the need to pick and choose and prioritize shipments. More focus on assortment optimization and increased focus on the customer first have been brought to the forefront. As an example, in the company’s March earnings release, Nordstrom referenced a fine-tuned optimized assortment as one of the keys to their Q1 success. This is likely a key theme you will hear more and more throughout this year as retailers work to understand consumer demand in the current economic environment.
If you are planning on being in Dallas next week, either at the Oracle Retail Cross Talk event or otherwise, we would love to meet with you to discuss how we can help your company address retail inventory challenges or any other initiatives you are undertaking.