As someone once said: Get your route to market right, and the rest will take care of itself. Even though it’s probably not 100% right in today’s customer-centric retailing environment, the theme is worth further exploration.
The overwhelming majority of editorial about today’s digital revolution focuses on the consumer, the shop or e-commerce. But it’s the source-to-shelf piece culminating with a customer-centric price, right at the shelf edge, which deserves a huge amount of attention. Source-to-shelf is one of the biggest challenges multichannel retailers seem to face today. What are the costs of not getting your inventory right?
An October 2018, a survey by Coresight Research and Celect was carried out among 200 senior decision makers at US retail companies. They were asked about managing retail inventory: how much inventory their company sells at full price, what are the factors that impact their markdown rate and the factors leading them to make better inventory decisions? How they think the advanced analytics tools could help them?
- Approximately $300 billion in revenues is the estimated markdown cost impacting US non-grocery retailers. That’s the equivalent of around 12% of all US non-grocery retail sales.
- 53% of unplanned markdown costs come as a result of misjudged inventory decisions including overbuying, buying the wrong type of products and misallocating inventory.
- 60% is the average full-price sell-through rate among US non-grocery retailers.
- Around 50% of survey respondents cited inventory misjudgements as a barrier to selling at full price.
- 86% of retailers in total identify specific uses for advanced analytics in their retail sector, such as to inform decisions regarding how much stock to buy, how to formulate promotional activities and which products to buy.
Retailers are facing intense competitive pressures due to the rapid changes in the retail and consumer landscapes. Increasing competition and greater consumer choice regarding where to buy are really increasing the pressure for more agile campaigning. We can also add sales lost due to stock outs and impatient customers not being able to find the products they want to the numbers in the survey. This is where the pricing, discount and promotion discussion begins.
Great inventory management with the flexibility of dynamic in-store pricing drives sales uplift and efficiency. NetTickIT and Brother printers provide a smart way to execute the prices and promotions at the shelf edge and across all the customer touchpoints. This has been presented by Pierhouse and Brother at EuroCIS 2019 – The Leading Trade Fair for Retail Technology in Düsseldorf, between 19 and 21 February 2019.