Once the foundation described in my last post is in place, retailers are in a position to optimize their planning across all their channels. Here are some strategies to consider:
Capture True Demand
As discussed earlier, today’s retail sales may originate online, but are often fulfilled inside a store. Besides requiring visibility into enterprise-wide inventory levels, equally important is having the proper merchandise available at the consumers’ fulfillment channel of choice. This requires retailers to distinguish between sales demand — where the order is placed — and fulfillment demand — where the order is fulfilled from.
By capturing and analyzing both sales and fulfillment demand, retailers have the opportunity to build assortments for individual sales channels based on sales demand, while optimizing inventory based on fulfillment demand. With insight into these two mission-critical streams of data, retailers gain visibility into true demand.
Optimize Cross-Channel Inventory
In the world of “order anywhere, fulfill from anywhere”, inventory visibility and accuracy is paramount. Even the slightest inaccuracies in inventory counts can lead to out-of- stocks, resulting in lost sales and more importantly, disappointed customers. To avoid these unnecessary issues, retailers need to ensure inventory accuracy and visibility across all channels and distribution options. Besides offering the opportunity to position inventory where it is most likely to be needed for fulfillment, inventory optimization also ensures desired products are available for sale wherever the demand arises. It is such a mission-critical strategy for omni-channel success that 74% of companies are revamping their inventory planning strategies to increase execution and shopper satisfaction, according to EKN.
Build a Cross-Channel Universal Assortment with Localization
Catering to customer preferences is a pre-requisite for omni-channel success. In fact, the more personalized retailers can make the experience, the stronger the customer/retailer relationship becomes. As a result, execution of localized assortments is also becoming a key differentiator in an increasingly saturated omni-channel marketplace. However, it also remains a highly complex undertaking. It requires companies to rationalize assortments based on sell-through of their selling channels, as well as to identify the appropriate breadth and depth across the channels. By developing a universal assortment that serves as a menu from which the planners can create channel-specific assortment offerings, retailers are better positioned to cater to local trends and plan for variances across the assortments and channels. Implementing a strategy that enables re-actability enables the flexibility to shift or adjust assortment strategies resulting in a healthier bottom-line.
Listen to Customers When Planning Physical and Digital Space
While omni-channel is often associated with an evolving digital backbone, the physical store is still the heartbeat of the experience, albeit that severe changes are underway. Besides featuring more digital touch points to interact with shoppers, savvy brands are also restructuring stores to help consumers complete their shopping journey in an efficient and satisfying way. This includes having merchandise and procurement options available at a moment’s notice. These evolving trends underline the need for localized and effective space planning solutions.
No longer applied to traditional floor plans, next-generation space planning models now must address new formats (including smaller footprints and even pop-up locations), expanded categories and dedicated real estate for in-store pickup. To ensure they can satisfy shoppers’ new omni-channel expectations, new store models must be based on shoppers’ navigation and purchase patterns across categories, store locations, channels and departments. This insight gives retailers an understanding of how to more effectively plan their store layouts in a method that not only addresses customer behavior, but is also developed to increase revenue.
Leverage Increased Opportunities for Customer Insights
Customer demand data clearly opens up a wealth of opportunity for retailers, especially as an omni-present business model that is by nature, consumer-centric, continues to evolve. With insights centered on understanding what shoppers buy, how they buy, when they buy, what they pay and why they buy, retailers are primed to target products at customers across all their selling channels. The power of affinity analysis on the customer and purchased product enables retailers the opportunity to upsell complimentary products to the customer when they have the highest intent to buy.
Execute Meaningful Pricing Strategies
A big challenge for many retailers is how to manage pricing in an increasingly omni-channel world. Sales channels are no longer separate entities for customers. They expect to pay the same price for a product or service regardless of where the transaction occurs and this is a struggle for many brands. Too many still present inconsistent or fragmented pricing strategies that can lead to customer frustration, confusion and distrust.
A clearly defined pricing strategy that takes into account customer exposure to multiple channels can ensure that customers are confident in an organization’s practices. Sure, pricing differences are often required based on regional differences or seasonal markdowns, but overall, it’s important to offer consistent pricing across channels. To avoid alienating loyal shoppers in the strategic pricing game, it’s best to build a base omni-channel pricing strategy and to manage exceptions, when dealing with products that are timely or seasonal, to avoid negative impacts on the bottom-line.