Why Is Inventory Management Important
Inventory management remains the cornerstone of successful retail. Experienced retailers understand the importance of metrics taken from inventory management. Analysis drawn from inventory management helps retailers make sound decisions that impact inventory costs, sales revenue, and profit margins. The most experienced retailers will tell you that although you can’t predict trends, you can achieve desirable outcomes by properly managing your inventory and paying attention to what data are drawn from your inventory management process.
Having the right products mean stocking items that frequently leave your store. The more items leave your store, the better your bottom line. Effective inventory management helps retailers understand what products to order and at what amounts, so they aren’t allocating valuable space for clearance section. An experienced retailer treats their store as prime real estate, with the goal being to produce as much revenue per square inch as possible. Products that overstay their welcome can hurt earnings. In comparison, products that never get checked in can have shoppers looking for the door, and go to the next store. Experienced retailers develop effective inventory management strategies to obtain the right products, in the right amounts, making the most out of their retail space.
Placement of Retail Products
The careful placement of retail products isn’t just for aesthetics. Retail displays should appeal to shoppers, but effective product placement connects shoppers to products with higher ticket prices. Retailers should provide product choices for shoppers with a product placement strategy which helps shoppers make the right choice. An effective product placement strategy should also send customers home with products they had no intention of purchasing in the first place. Experienced retailers understand the significance of where a product is placed in their store. Inventory management helps take the guesswork out and place retail products in the store correctly. By tracking where certain products are placed retailers help shoppers make purchasing decisions that benefit them both.
Who are your Customers, Really?
Understanding which products frequently move out your store provides important insight into your customers’ profiles. Understanding your customers can promote effective communication. It may take some detective work to connect the dots, but conversations at the counter along with other marketing tools can be approached with purpose.
Build Your Brand
Not just a cliché, but a reminder. Building a brand happens in more ways than you can think. Besides marketing a message, another way brands are built-especially for retail businesses in smaller communities which offer the familiarity of products and services. Take a pizzeria for example, one of the most recognized community staples maybe in the world, not all pizzerias are built the same. Some pizzerias are great for filling Super Bowl Party orders, while others offer specialty menus that are all their own. Mmm, pineapple and oyster! I think you get the point. From convenient stores that carry the old-fashioned Coca-Cola in the glass bottles to the Wine Store that carries that brand you are in the mood for, when customers know what they want they’ll unconsciously go to stores that consistently carry their products or services.
Introduce Customers to Your Other Locations
Products requested by customers when they’re out of stock can tap feelings of regret for many ambitious retailers, but for retail stores with multiple locations it provides an opportunity to introduce customers to other locations, while keeping their business. Retailers with multiple locations have a unique advantage if products are out of stock, they have other locations that might have the items their customers request; for this reason inventory management takes on a very different importance. Managing inventory for multiple stores is a challenge but can come with its own rewards.
The capability to sell products online is proving to be a huge advantage for small to medium sized retail businesses (SMRB) that continue to face overwhelming competition against big eCommerce businesses. eCommerce has in some ways leveled the playing field, allowing SMRBs to compete with products and services that bigger businesses may not provide. However, with great power comes great responsibility. SMRBs face challenges and are still at a disadvantage because they lack the distribution capabilities bigger eCommerce businesses have; this is why a well thought out, and executed inventory management plan is paramount. SMRBs need to be confident that products displayed online reflect their stockroom. There’s nothing like having online customers finally find what they were looking for only to find you don’t actually have the product. So if you’re not Amazon a bit more elbow grease might be necessary for your inventory management process.
None of the practices in our series of posts about creating memorable customer experiences will make a difference in your bottom line if you don’t train your employees to implement them.
In lieu of the World Cup, we’d like to kick off (no pun intended!) this week’s retailer with Jeffrey Hastie from Montclair Soccer Stop. The shop sits in the heart of the New York City suburb of Montclair, NJ.