Inventory distortion is the combined cost of out-of-stocks, lost sales, and overstocks that retailers must discount significantly to sell. It results from the inability of retailers to respond swiftly and in a flexible way to consumer demands. This is a huge and costly impediment that can have far-reaching effects.
The key to a successful distribution strategy is ensuring product is available to the customer whenever and wherever they need it. Retail analytics and DSD software can identify where and when a product isn’t on the shelf when it should be so you effectively fix underlying execution issues. Analytics can also present your business with opportunities for expanded distribution so you can make your product available to all customers searching for it.
Nothing is more damaging to shopper loyalty than product being out of stock when the customer intends to purchase, and with customers purchasing through a multitude of channels these days, it has never been more important to have product available for the customer when they are ready to make that purchasing decision. Using a retail analytics solution to predict out of stocks and shift inventory based on customer demand can ensure product will always be available to the customer whether they are shopping in-store or online.
Fixing distribution issues and preventing out of stocks is a pipe dream if you can’t see sales in real time. A continuously faster moving retail environment requires decisions to be made quickly. Waiting days or weeks for sales results to come in may result in missed opportunities that could have been taken advantage of with faster decision making. Strong retail analytics platforms will allow you to see sales as they happen, so you can make decisions based off of current trends instead of outdated ones.
There are many external factors that can influence the reasons shoppers purchase your product. A strong promotion on TV’s may cause a spike in sales of HDMI cables. An impending winter storm may spur customers to stock up on essential household items. Using predictive retail analytics to forecast the effects external events will have on your shoppers can help you optimize inventory in advance and structure promotions to capitalize on these events when they occur.
In addition to external factors, pricing can have a major impact on how quickly your product sells. A two dollar price drop may only produce a small lift while a five dollar price drop may double your production. Using retail analytics and DSD automation to understand exactly how pricing effects velocity will ensure you are always in a good position to avoid out of stocks and will leave you feeling confident in the ROI on price drops.
In order to properly analyze the performance of your business you need to understand the context in which it is performing. Maybe your business was down last week, but upon further research you find out that the whole industry was down even further. Suddenly you’re feeling great because you were able to minimize damage to your business on a bad week for the industry. Vice versa, maybe your business is up year to date but upon looking at your competition you realize they are up even more. This makes you wonder what your competitors are doing to capitalize on a growing industry that you aren’t. A solution that uses a retail analytics dashboard will allow you to easily benchmark your business against competitors and the industry so that you always have the right context to make decisions.
iControl’s collaborative retail analytics solution offers exactly this. It provides a normalized, harmonized, and secure web portal where critical trading information can be shared. iControl helps you to analyze product orders and allows retailers and trading partners to proactively evaluate past in-stock performance. We also provide forecasted inventory levels with alerts that anticipate expected out-of-stocks.
To learn how the iControl suite of solutions can help your business make better merchandising decisions, contact us today.