Retailers finding better methods for keeping track of their inventory
...An intranet kiosk inside a store would let shoppers order whatever they want, regardless of the inventory at hand, he said...Walgreens and Sears profiled...
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December 30, 2003
BY SANDRA GUY Business Reporter
Shoppers know the dreary drill all too well: A department-store chain has your size or a certain brand at one of its stores -- but it's 30 miles away.
At a time when online sales are booming, why are brick-and-mortar stores still struggling to make merchandise easier to find?
Many retailers still rely on buyers' and merchants' gut feelings when they decide how much merchandise to order and where to display it.
That's slowly changing.
Planning and merchandising software has burst onto the scene, and retailers are starting to use these and other analytical techniques to find out how to give shoppers what they want where they want it.
"Retailers are finding that the cost of carrying inventory is very high, and they are not keeping inventory consistently across their chains," said Ted Dinsmore, president of Conchango Inc. in New York, part of the U.K.-based technology consulting firm.
Retailers are installing software that crunches numbers from store sales, analyzes marketing strategy and spits out inventory-control and cash-register data. It goes beyond the traditional Excel spreadsheet by drilling deeper into sales and supply-chain data in a variety of ways.
"Rather than being reactionary, waiting for an item to sell out, retailers are starting to be analytical," Dinsmore said.
Conchango has a deal with a large bookstore chain that Dinsmore cannot yet identify to use computer technology to analyze the company's sales. The issue arose when the company's executives wanted to confirm their suspicions that they could boost sales by gaining greater insight into hot and slow-selling titles.
Sears Roebuck and Co. evaluates demographics, seasonal weather predictions and each store's location and square footage to figure out the right merchandise mix, said spokeswoman Lee Antonio.
The demographics of Sears' store in the Loop show customers are a multiracial, multicultural mix of urban dwellers.
As a result, a young men's "Urban Shop" occupies a prominent spot surrounding the escalator on the second floor. Its sales are better than the company's average for the 50 shops in targeted stores nationwide.
Sears introduced the Urban Shop this fall to appeal to young men with labels such as FUBU, Icewear and Russell Simmons' Run Athletics sportswear.
The Loop store also carries a larger-than-normal assortment of cold-weather wear such as women's hats, gloves and scarves. As a result, the store has become the chain's No. 1 seller of cold-weather apparel.
The Hoffman Estates-based retailer keeps an eye on local events and happenings to help it keep items in stock.
For example, Sears on State will expand its assortment of church hats next spring because the Goodman Theater will be showing "Crowns," a gospel musical that celebrates African-American women and their church hats.
Walgreen Co. uses a similar approach by using a home-grown strategic inventory management system.
The system comprises hardware and software that analyzes data from cashiers' sales scanners to manage inventory and feed information back into the supply chain so supplies don't run out, said John Gleeson, vice president and treasurer for the Deerfield-based retailer.
Walgreen will enhance the system in February by adding a forecasting tool.
It will feed store sales projections into the company's distribution centers, helping prevent excess or inadequate inventory. Stores also might be able to stop carrying backup stockpiles. And finally, Walgreen hopes the forecasting tool will help it save costs to pay people to handle and stock products a store doesn't sell.
Walgreen also stocks items in different quantities and at varying shelf heights in each store, depending on its demographics. The fast-growing drugstore chain's customers can range from tourists to retirees to wealthy suburbanites.
"A single presentation doesn't provide the flexibility we need to manage our inventory well and to present the right items to the customers," Gleeson said.
Jay McIntosh, a retail analyst for Ernst & Young's Chicago office, sees opportunities for retailers to incorporate more of their dot-com operations into their brick-and-mortar stores.
An intranet kiosk inside a store would let shoppers order whatever they want, regardless of the inventory at hand, he said.
Posted by Craig at December 30, 2003 05:52 PM