Stock levels are one of the most critical facets for effectively managing retail. Over ½ of small businesses use offline inventory tools, or no inventory management tools at all. A much larger group of enterprise level retailers have un-coordinated inventory management systems that result in issues with omnichannel order management.
There is an emergence of an evolving customer profile, in which consumers are present on multiple channels. Retailers have to work to effectively meet the needs of their consumers in store and across online channels. Inventory management quickly came out as one of the more significant issues in dealing with the insurgence of behavioral changes. Turbulent purchase patterns can leave retailers short of vital merchandise during high demand purchase times. New releases or sales stockouts like this can lead to a negative customer experience and long term loss of custom. But, overstocking can be equally problematic, storing stock that won’t be sold can be just as expensive as missing sales. Carrying costs are a huge burden for sellers across verticals, while hard goods dont go bad, they do go out of style.
But, the reality is, stock issues on both sides are a byproduct of a shortsighted approach to inventory management and data visualization. While stock level issues are an inevitably of retail, being able to make informed decisions about stock can be the difference between profitability, productivity and customer engagement.
Retailers often presume that they have a full comprehension of their customer behavior. While brands have access to anecdotes about their customers, they often presume to know more than they actually do about their shoppers habits. Brands often have an information deficit when it comes to understanding customer behavior. When retailers are not able to see every purchase from every customer, on every channel, they are blind to the behavior and actions of their shoppers and as a result lose sales and offer a lagging customer experience.
With this lack of visibility, shoppers are not fully recognized and their needs are not understood, the retailer doesn't know if they already searched online for the item, or if they visited another location in search of the product. Without being able to see all of these prior interactions the retailer is not able to adapt stock to locations as needed and could be wasting stock. Customers may already be showing you exactly what they want to purchase, your business on the other hand may not be able to listen.
By leveraging customer listening technology, social media and building out an effective customer relationship management approach. Retailers can identify and create segments of customers that pertain to different trends. If you have customers that frequently purchase during sales, or always buy the newly launched products, it is easy to predict the quantity of sales that will come during the next launch. Historical behavioral data assists in crafting a targeted inventory management approach, it allows retailers to predict exactly how many customers will purchase, ensuring that stock levels are completely accurate and available everywhere customers are intending to shop.
One of the primary reasons retailers overstock, is because of fear of stockouts. Retailers lose an estimated $34.8 Billion to Amazon & other e-tailers as a result of stockouts. Approximately, 24% of Amazon’s retail revenue comes directly from retailer stockouts. When stores stock out, the impact is compounding. They lose the immediate sale, face damage to brand reputation, have to rush to restock and lose the customers in the long term. So it makes a lot of sense why retailers are keen to have more stock rather than less.
But, overstocking is not an effective solution as a result of the fears of stockouts…
It is much more important for retailers to craft an effective inventory management approach. Retailers can leverage RFID integrations to inventory control systems allowing them to seamlessly monitor inventory at every location, immediately updating inventory as stock moves, without additional work. For retailers to have a seamless approach to inventory they must create an approach that monitors stock levels in real time across locations. Granular control will allow retailers to pivot easily and meet the demands of their ever evolving customer base.
Overstocked clothing is an ongoing problem for stores, the issue comes from forecasting demand around seasonal trends. Managing sizes can be tough and identifying which colors, styles and cuts will be the most popular, is a tricky gambit. While clothing is not a traditionally perishable good, the style will expire in relevancy and customers will again be focused on a new product line.
Retailers are often failing in effectively forecasting demand and this comes from a range of issues. A lack of visibility into inventory across channels, outside events (Like COVID), and shifting perspectives can all result in enhanced purchases of categories that are often neglected. Consider the rise of active & loungewear as a result of more people working from home during the COVID-19 pandemic. Or how brands see surges in sales after influencers model their new styles.
This can make a specific range much more popular than it usually is. If inventory tracking technology is not setup to effectively visualize this as it is happening, it can already be too late for the retailer to respond. Once the items are not available on shelves customers are already frustrated and retailers have lost potential revenue.
Being able to build a complete forecast is essential, if retailers want to compete with the largest e-tailers across the internet. Customers are already shopping on Amazon, so what will stop them from purchasing from them again? Inventory has to be readily available for consumers at the right time, understanding customer data and being able to build out a complete image of where customers are, allows brands to reach customers when they are ready.
With connected omnichannel systems retailers can develop a system that visualizes inventory as it stands, but this system relies on access to every silo of inventory and every drop of customer data. Automation and logic can be powerful assistants but brands have to build an awareness of all of this data instantly.
If you really want to revolutionize the way you manage inventory, Teamwork Commerce can help. With the robust inventory management platform, retailers can leverage automated inventory management, omnichannel inventory control and stock management directly from the Teamwork mPOS. Learn more: www.teamworkcommerce.com/inventory-control