Inventory ties up cash. It’s an age-old reality that is becoming more of an issue as the omnichannel retail experience heats up. It’s tough to rely on the old periodic inventory count and keep up with consumer demands such as BOPIS (“buy online, pick up in store”) and BORIS (“buy online, return in store”).
In fact, the expectation of online and in-store connected experiences means you need real-time access to inventory levels and merchandise availability regardless of the channel your customers are using.
According to an IBM study, 81% of U.S. consumers “consider it important to be able to check in-store availability of an item before visiting the store. And 80% of consumers want retailers to guarantee the in-store pickup time for an online purchase”.
But, according to Boston Retail Partners, “only 56% of retailers are planning inventory across both physical and digital channels, while 38% of retailers plan inventory for their brick-and-mortar stores alone, and 15% focus solely on e-commerce.”
The IBM report goes on to say “Existing...processes are not able to predict inventory needs as easily and accurately as they did in the past...As a result, this causes imbalances. Whether customers pick up orders in store or orders are shipped from a distribution center, retailers need to ensure they can move inventory intelligently. If they don’t, excess merchandise ties up capital and leads to lost revenue through markdowns. Out-of-stock leads to lost sales. Poor planning causes upheaval across the board.”
So if you haven’t started planning a new, omnichannel, inventory management strategy for your mid-size chain, it’s time to start. Not all technology systems are alike, so it will be important to question and test capabilities and...JUST AS IMPORTANT...explore how systems can be integrated with your other business systems.
How to start moving to an omnichannel inventory management strategy
Adapting your management practices to the new reality isn’t going to be easy. But there are a few steps you should consider that will help support your transition.
Steps to omnichannel inventory management:
- Take a holistic approach to inventory management. Connect your brick-and-mortar inventory with your online merchandise by breaking down any silos between the two sales channels. This helps to match inventory levels with customer demand more precisely.
- Have complete enterprise inventory visibility. Manage your entire portfolio through a single “lens” if you can. You’ll need complete visibility or you can’t confidently promise availability to customers. Or accurate shipping or delivery dates. Plus, you’ve got to put systems and processes in place to maintain that visibility on a real-time or near real-time basis.
- Get a better view of your customers. How well do you know them? Which channel do they use to research products? Where do they do most of their purchasing? Once you get a complete view of your customers’ activities, you can better predict demand and understand where and when you’ll need inventory.
- Use marketing channel data to tighten up your forecasting and inventory replenishment practices. You can get a lot of insight into customer demand by analyzing your marketing results. What are your customers searching for? Which product offer emails are getting the best reactions? Use this data to manage inventory according to shoppers’ interests.
- Centralize order management. Put a system in place that centralizes all your “paths to purchase”...e-commerce, call center, in-store...whatever channels you provide for buying merchandise. Centralizing your order management helps you understand how each channel performs and which ones your customers prefer. And it helps to connect transactions started on one channel but completed through another one.
- Give store associates better visibility into store inventory. When they have the instant ability to locate—and maybe order and drop-ship—out of stock items found somewhere else in the retail organization, they can provide a great experience for your shoppers and alert management instantly about inventory voids...while they’re engaging with customers on the floor!
- Get merchandising execution to 100% at every store. Managing associates’ on-floor activities in real time helps keep shelves full and displays in peak condition, so your customers remain happy to keep your in-store sales consistent, which helps with inventory forecasting.
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