With the holiday season in full swing, retailers are contenting with numerous inventory situations. You want to keep inventory moving off the shelves, of course, but you typically need to move it between channels and locations to ensure you have the right goods in the right place and the right time.
Since inventory levels are set in advance for the holidays, how can retailers prepare for ordeal with the potential overstocks or understocks that are sure to crop up?
Technology can help, especially if it’s focused on promotion execution, demand signaling, inventory leveling and vendor credit analysis, says Noel Goggin, senior vice president of retail at productivity software provider RedPrairie.
But in general, merchants make all the holiday planning decisions that fall into two buckets—inventory and people, Goggin says. “The synchronization of these buckets is crucial.” You need to have enough people on payroll with a blend of full- and part-time employees, he notes.
You have to determine where your labor force is best leveraged. For example, Goggin says, an apparel retailer might receive its best ROI from its wardrobe segment. “Having the right people in wardrobe display is critical.”
And keep wheeling new products in, he says. “That has a proven ROI for driving sales and increases average ticket price per transaction.”
Inventory is critical for apparel retailers because problems arise regarding the availability of specific colors and sizes, Goggin says. “You need global visibility through your supply chain. You may want to move some inventory from one location to another and sell at higher price at different locations.”
After the initial allocation of inventory to stores, monitor through sell throughs at the locations, Goggin says. Look at what’s been sold, and the sales velocity from each level. Determine where inventory should be redistributed to maximize sales. “As long as a company has the analytics and global visibility of where inventory is, it can move product,” Goggin says. “The cost of inventory redistribution isn’t that high since the trucks are on the road anyway.”
Analytics and workforce management is the key to inventory management in retail, Goggin says. “Things will go out of stock. Then it’s a question of having an adequate substitute for that product and a sales staff that can sell customers on those alternate products.”