As the sugar high from Halloween subsides, retailers are shifting their focus to the next holiday spending rush this season: Black Friday. The dangerous combination of pumpkin-spiced lattes, a strong economy, and product deals and discounts will fuel consumers into the eagerly awaited shopping period for retail.
The outlook on holiday spending this year is optimistic. Retailers are getting holiday ready and pulling out all the stops, such as Target and Walmart's free two-day holiday shipping rollout and Wayfair's holiday pop-ups.
However, the difficulties in achieving success during the holidays always fall back on how effectively a retailer can manage their inventory. Are you providing the right product, in the right amount, at the right time and place? Here are some of the biggest inventory management challenges retailers must overcome this holiday season:
1. Keeping Store Shelves Consistently Stocked
Did you know that shoppers encounter out-of-stocks in as many as one-in-three shopping trips?
Considering the varying peaks in foot traffic and demand during the holidays, the missed sales opportunities from stockouts are far from trivial as retailers leave roughly $1 trillion in consumer’s pockets annually.
The thing is, the cost of carrying inventory is high: keeping shelves consistently stocked during the holidays is tricky for retailers, especially as many try to strategically position their promotions throughout the season. As such, retailers need to find the sweet spot between overbuying and ending up in a situation where they sell out too quickly.
The need to balance inventory in-store, along with demands from e-commerce, is prompting companies to look for better ways to ensure stock levels are prepared to meet consumer demand. Advanced analytics and data-driven approaches to merchandise planning and allocation can set retailers up to succeed by helping maintain a balance between inventory stock and turn.
2. Curating Assortments to Reflect Localized Demand
While keeping shelves consistently stocked for the in-store consumer is crucial to the overall experience, having the right product mix can also be a deciding factor for holiday shoppers. Findings from a recent survey noted product quality and variety are among the top three factors consumers consider when deciding on a shopping venue:
“Consumers noted that what matters most when deciding on a shopping venue are price and value, product quality and variety, and presentation.” – Deloitte 2018 holiday retail survey
Incorporating a quality assortment of items, based on localized data for a particular store, can impact the opportunity for a sale the second someone walks through your door.
3. Improving Omnichannel Services to Meet Expectations
Retailers can no longer look at in-store inventory needs in isolation. Many traditional retailers find themselves struggling to navigate the e-commerce and omnichannel landscape efficiently, and, as a result, overextend themselves in a rush to leverage their physical store fleets.
Last holiday season, numerous retailers dropped the ball on fulfillment because they didn’t prepare well enough for the growth in online sales, leaving many customers with delayed deliveries. The operational challenges inherently linked to implementing an omnichannel approach are top-of-mind for many this season since e-commerce sales routinely jump over the holiday period. As such, there’s a need for intelligent order fulfillment solutions to leverage stores properly and compete effectively:
“Having a single enterprise order management system that supports inventory regardless of its location and channel for delivery is crucial in today's retail environment [.] The enterprise order management solution needs to be smart enough to optimize the shipping for the greatest margin/sales opportunity. While one is more expensive on this sale, it avoids missing another sale by creating an out-of-stock.” – Supply Chain Dive
As an example, retailers like the ALDO Group incorporate advanced analytics into their OMS to help identify the most cost-effective location to ship e-commerce orders from and deliver digitally-purchased goods much more efficiently.
Focus on What Matters Most to Holiday Shoppers
To meet the needs of shoppers walking into your stores, while delivering expectations attached to online purchases, retailers must focus their inventory efforts to reflect what matters most to consumers this holiday season.