Your success as a retail business depends on your product lineup: selling the right items at the right price points at the right times to achieve profitability. Ordering a surplus means you’re stuck housing and moving the extra products; ordering too few means customers will have to find out you’re sold out of what they want. It’s a delicate balancing act, whether you’re a small boutique business or an international ecommerce retailer.
Optimizing your retail store’s inventory is absolutely paramount to your bottom line—so here are six tips to help your business optimize its outcomes in this department.
#1: Organize Your Storage
Ever had the lucky feeling of finding $20 in the pocket of pants or a jacket you haven’t worn in years? Let this be a lesson to us all to clean out and organize our closets more. The same principle holds true for retail. If your warehouse is a mess, there’s a very good chance you’re missing out on opportunities for monetization here.
One business consultant notes how “disorganization can cause stock to get backed up or even lost” which in turn makes it harder for employees to keep the shelves—virtual or brick-and-mortar—stocked. Keeping your storage area organized also helps you know when something is missing because of loss or theft, rather than it being buried under a pile of last season’s products in a corner somewhere.
#2: Track Product Performance by SKU and Location
Every retailer has been in the unfortunate position of ordering too much of Product X and not enough Product Y—it’s a frustrating, expensive mistake to make.
This is where retail analytics can help inform decision-making. Using an advanced retail analytics platform like ThoughtSpot, merchandise planners, brand managers and sales associates can query data directly, getting instant results on searches like “Sales Growth by Category,” “Inventory by Warehouse” and “Sales by Product SKU.”
When decision-makers have easy access to analytics, they can get the data-driven answers they need in seconds. This helps avoid errors like ordering the same amount of Product Z to every location when its performance varies wildly by geographic location and conditions, among other money wasters.
And yet a recent study found only one-third of retailers leverage advanced analytics to optimize their inventories! This means 67 percent of retailers are currently missing out on the benefits of using analytics to improve planning decisions and inventory processes.
#3: Identify Missed Opportunities with AI
Another emerging facet of retail analytics is the ability to uncover insights with artificial intelligence algorithms—rather than waiting for an employee to ask a specific question, an AI-driven engine like SpotIQ from ThoughtSpot can identify trends, anomalies and relationships on its own. This technology can help retailers stay ahead of the curve with insights related so sales, customers and inventory.
#4: Get Your Teams on the Same Page
Make sure each team understands its relation to inventory: Who handles sales projections? Who places orders? Who troubleshoots the supply chain? Who takes care of deliveries? Who processes returns? Break duties down clearly by team, and by individual role within teams. Then communicate these expectations to all so nothing slips through the cracks and to avoid teams stepping on each other’s toes.
#5: Identify Bottlenecks and Eliminate Them
Ask yourself this: When deliveries arrive, are employees prepared to unpack, inventory, store and stock them? If there’s any delay here, it’s a bottleneck—and that’s an issue for profitability.
Identify current sticking points centered around inventory then work specifically to alleviate them. You’ll save everyone stress and a hit to your profit margins.
#6: Figure Out How to Move Underperformers
Maybe your projections for seasonal performance were off; it happens to the best of us. But now you’ve got hundreds or thousands of extra units taking up shelf space. It’s in your best interest to figure out how to move underperforming SKUs as efficiently as possible.
You may have luck discounting them as part of a special sale. Perhaps you include them in a bundle with a high-performing product. Whatever you do, keep your inventory moving. Come up with a system for eliminating excess while minimizing loss.
These tips will help you optimize your retail store’s inventory, promoting better business outcomes all around.