Strengthening the Heart of Retail
Improve customer satisfaction-and shareholder value-by giving customers what they want when they want it
Inventory is the largest financial asset in retailing. It's all about having the right product in the right store at the right time and at the right price. If you manage your inventory well, you can reduce capital costs and achieve retail success.
And merchandising-selecting inventory assortment, allocating it to stores, replenishing it efficiently, and creating an attractive and memorable shopping experience-is the heart of retailing. It determines retailing survival, and success.
Early and Fast Returns on Fact-Based Merchandising
Using business intelligence (BI), you can get high return on investment (ROI) and fast paybacks by going for low-hanging fruit with initiatives like:
- Product profitability measurement. Know how much each product really delivers in net margin, not just sales or gross margin, so you can price and promote it without inadvertently losing money.
- Promotion/pricing effectiveness. Know the real results of each promotion, including its total effects on cannibalized and related affinity/halo products, so promotions truly add to profits rather than only to sales. This allows you to take corrective action on current promotions quickly, if needed. It also allows you to optimize the planned mix of sales and net margins for maximum return on assets.
- Vendor performance measurement. Give merchants and vendors accurate up-to-date information on the performance of vendor brands, SKUs, deliveries, and lead times so buyers can negotiate better deals. See our Performance Management in Retail white paper to learn more about this opportunity.
- Merchandise manager dashboard. Give each merchant constant feedback on key performance indicators (KPIs) and hold them accountable for these to create an environment of continuously improving business performance.
- Auto-replenishment. Use BI to forecast how much inventory is needed to meet demand through the season and track availability, so you can automatically reorder goods from distribution centers and/or vendors, saving merchants time and increasing return on assets.
- Optimize prices and markdowns. Many retailers are leaving mega-dollars on the table with prices on some items. Many are also neglecting to use markdowns properly to move goods that are about to go out of date, out of style, or be replaced by a new product. With BI, you can deliver exceptionally fast and high ROI for companies by analyzing and optimizing pricing and markdowns.
- Optimize assortments and space management. Automate the process of analyzing product categories in stores to optimize the amount of space allocated to categories/departments. Further analyses can then allocate the right assortment and quantity for each SKU with the allotted space.
Customizing Inventory for Each Store
Even stores a few blocks apart from one another often have substantially different patterns of local demand. By customizing the assortment and replenishment for each store or each narrowly defined cluster of similar stores, you can improve in-stock sales and customer satisfaction while decreasing excess inventories.
And BI solves the problem of customizing assortments, replenishment, prices, and quantities at the store level. Because you might have to make over 1,000 replenishment decisions per minute, 24 hours a day to keep up, you need powerful automation. And with BI, you've got that and more.
