Inventory management is key for profitability in retail. Consumers today have high expectations, they demand inventory visibility in real-time across all channels and want to be able to shop seamlessly wherever, whenever they want. So it goes without saying, that managing your inventory is no longer a set-it and forget-it endeavor. Retailers need to be agile by using their POS inventory data to spot trends and correct problems in real-time. But how to make that shift, towards a more proactive inventory mindset?
Historically, the inventory cycle was dictated by manufacturers. They set the rules based upon their production cycle which was geared towards seasonality, causing a “trickle down” effect as retailers adjusted to the trends. But today, communication is instantaneous and demand is continuous. Consumers see runway trends but are no longer willing to wait 6 months before merchandise hits their local boutiques. They have access to a huge variety of products across many verticals and can shop 24/7 — in store, online, or on mobile devices. Inevitably, the retail inventory cycle has accelerated rapidly.
Today, inventory management is often dictated by customer demand and retailers that use their POS inventory data to keep stores fresh and timely are enjoying success. According to Marc Weiss, CEO of Management One, from his vantage point in working with hundreds of retailers, “those retailers that have the shortest lead times have the most success.” Fast fashion retailers like Zara transformed retail by bringing new collections into their stores every weekly, a clear departure from the rhythm of the runway season. Coupled with the advent of Amazon, immediacy has now become the new normal across all retail categories. Even in brick & mortar stores, people want fresh product, great prices, in stock, available right when the trends break.
Inevitably, retail inventory management best practices have changed. In a very short time, retailers have been pushed to shift their mindset in order to meet this new breed of customer. It’s been a big leap, to say the least, and the majority still have not crossed the divide. Yet, there are some shifts that are essential to make in order to compete in retail today. Here's a snapshot look at inventory management techniques comparing a traditional to a more modern mindset.
The change to a more agile mindset becomes more natural when retailers start to harness their inventory data and run a regular cadence of inventory reports. Retailers now have the information, access, and data available through their POS software to make strategic inventory decisions allowing them to respond quickly to both problems and opportunities.
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Topics: Inventory Management