Practical advice for how specialty retailers can make optimal stocking decisions with limited shelf space.
Specialty retailers are faced with a plethora of unique challenges. However, potentially the most challenging part of being a specialty retailer is keeping your inventory stocked on a limited amount of shelf space. Retailers who work out of carts and kiosks in shopping malls don’t have the luxury of a stock room to keep extra merchandise. Therefore, it’s essential to make sure that shelves are stocked with the right amount of the right products at the right price.
But no matter how long you’ve been in the business or how much insight you’ve gained about your customers over the years, you’ll never be able to predict how many consumers will visit your shop each day with pinpoint accuracy. There are just too many variables and a great deal of room for human error. As a result, it’s impossible to use your own knowledge to determine how much of a product you should stock at any given time.
Luckily, cloud-based business intelligence technologies can solve the inventory equation without occupying any of a specialty retailer’s extra room. And they’re not just for large retailers anymore—retail predictive analytics solutions exist that can help specialty retailers make optimal inventory management decisions.
But before making any investment in a retail analytics solution, specialty retailers need to do their homework. Specifically, retailers should adopt a solution that:
Utilizes forward-looking processes
Unfortunately, many retailers rely on sales history to determine the amount of inventory they should stock. They revisit how much of an item sold last November to make stocking decisions for this November. But the reality is that looking backward doesn’t give you any accurate indication of what’s going to happen in the future. Using that logic, retailers might very well miss out on overlooked sales opportunities they could have capitalized with additional inventory in stock. Retailers need predictive insight into how many customers will visit their shop and how many products they’ll sell in a certain timeframe, information that only a forward-looking solution will provide.
Automatically determines replenishment
Running out of stock is never an option for a specialty retailer working in an overly crowded marketplace. As most of these retailers don’t have an online presence, the only merchandise they’ll sell is directly from their cart or kiosk. Being out of stock for a kiosk or cart with an already limited amount of shelf space could spell disaster—especially during a peak shopping time like the winter holiday season.
Therefore, it’s essential for retailers to use a solution that considers dozens of factors, including seasonality and special promotions to determine when a product needs to be replenished and what quantity needs to be ordered. Being alerted to diminishing product stock allows retailers to be one step ahead and keep their inventory stocked with products consumers want—without having unnecessary carrying costs pulling them down.
Calculates optimal price points
While promotions and special offers typically move products off the shelf quickly, unnecessary markdowns can cost specialty retailers considerable revenue. An advanced predictive analytics solution can identify what factors—such as an optimal price or a calculated discount—drive sales of an individual product. The solution then builds an optimal pricing and markdown strategy, maximizing gross margin. Advanced predictive analytics programs can flawlessly calculate in seconds pricing decisions that would take a person hours or even days to determine.
Integrates with current enterprise resource planning system
As specialty retailers are often working with a limited technology budget and don’t have the time or knowledge to manually combine information systems, an effective predictive analytics solution should integrate seamlessly with the existing ERP. As a result, the new platform can pull all the data it needs from the current system and leverage the information to produce the most effective results for the retailer. This will save retailers both time and money when implementing a retail predictive analytics system.
Retail technology is continuously evolving to meet the escalating demands of today’s consumers. By utilizing a solution that automatically balances inventory assortment and takes into account every possible variable, specialty retailers can put more products in their customers’ hands without wasting an inch of shelf space.
Advanced systems are able to forecast product demand and configure the most advantageous markdown strategies, making the retailer’s job easier than ever. Optimizing the inventory management process will provide specialty retailers with fast, tangible results by increasing sales and decreasing legwork.