Omnichannel retailers aim to satisfy customers no matter how they choose to engage: Online, in-store or a combination of the two.
It’s never an easy feat, as success depends upon a tightly integrated front and back end in order to provide customers a seamless, successful shopping experience.
But since reopening after COVID-19 lockdowns, many retailers have had to carefully assess how they were navigating the use of store inventory for their omnichannel order fulfillment strategies.
Inventory visibility across channels
Management of inventory is a particularly thorny issue for any retailer with an omnichannel philosophy.
The retailer must first accommodate multiple sales channels simultaneously: An online shopper must be able to “see” what products are in stock just as easily as one who is physically in the store.
Then, the retailer turns that multi-channel strategy into an omnichannel one when, for example, it allows a customer to: shop for items on a mobile device; log onto a retailer’s site hours later on a computer and access the same shopping cart; check availability online and place an order for curbside pickup.
However, since stores reopened, inventory counts are becoming muddled as retailers had been using store inventory to fulfill online orders.
Being able to reconcile what has just been purchased online with in-store inventory – and meeting the expectations of both types of customers — is a gargantuan task.
Customers should never see an item in stock online and discover it is sold out once they reach the store.
Some of the reasons for such discrepancies include:
Shrinkage: Shoplifting and employee theft account for substantial loss of inventory. Fraud and administrative errors are also to blame.
Data inconsistency: Online ecommerce, in-store POS systems aren’t tightly integrated or are being manually updated, so floor count may be inaccurate.
Resource strain: Sales associates are performing fulfillment tasks, so they have less time to help shoppers on the sales floor locate items.
Payment timing for BOPIS orders
In addition, payment timing can cause inventory challenges. Items that are part of orders that are paid for online but picked up at a store are likely removed from inventory earlier than those that are paid at the time of pick up.
Paying before pickup not only expedites that process for ecommerce shoppers, but for those in-store as well. In-store shoppers experience longer wait times when online customers must join the line to pay and pick up their orders.
Poor fulfillment has a significant negative impact on customer retention. It is difficult to have the entire picture of what inventory is where throughout all channels.
Having accurate inventory visibility – which provides stock, order monitoring and tracking information — is crucial for a successful retail operation.
Because retailers are fielding orders from different sources – including online purchases with home delivery, online purchase with an in-store pickup (“click and collect”) and in-store purchases — keeping track of those sales and inventory is mission critical.
Omnichannel inventory management helps the customer make purchases confidently
Robust inventory management provides the means to get the correct products to customers quickly and efficiently.
Omnichannel inventory management is integrated across all sales channels, offering clear data visibility to retailers, as well as stock information to customers. It’s often coupled with smart warehousing, which automates back-end decisions and tasks, improving employee efficiency.
Omnichannel inventory management ensures that customers who want to use different devices and buy through various platforms are able to do so successfully. Omnichannel is a unified process in which each platform communicates with another, creating a seamless whole.
While multichannel retailers sell using many platforms, most of them are unintegrated. Store and online inventory management must be integrated with your other systems, including order and CRM software.
By integrating the inventory management systems, retailers have improved data visibility. All data on sales, suppliers, returns are in one centralized location.
When orders are placed – in any channel – stock is updated in real-time. Therefore, all employees, from the inventory picker to the store manager to the customer checking online supply, can be confident in the data they access, even if the orders were placed in a different country or channel.
RFID innovates, making taking inventory fast
Despite the heavy-hitting technology omnichannel retailers rely on today to conduct their daily business, physical inventory counts continue to be invaluable.
Such counts verify inventory and ensure there are no variances caused by overages or shrinkage, for instance.
However, this activity doesn’t have to be manual. RFID technology can help speed up inventory counts while providing workflow automation.
An RFID tag is placed on stock and read with a handheld device. RFID can scan or “read” many items at once and doesn’t require line of sight.
Products or pallets can be quickly read without positioning the tag directly in front of the reader, a big advantage in warehouses or other dense environments.
How RFID further empowers omnichannel operations
Keeping inventory counts accurate requires the integration of in-store POS that reflects the actual count on the floor, which is reflected in online data.
Although back-end technology is important to maintain accuracy, inventory is a customer-driven aspect of business.
Improving practices and systems assists retailers to meet more customers’ expectations, increase satisfaction and retain more customers.
Tailoring an omnichannel inventory management system to focus on customers helps retailers reap the benefits of having a loyal, satisfied customer base.
Today’s customers are looking for a seamless purchasing experience, whether that’s in-store, online, or a combination of both. But the so-called “last mile” — the time it takes for a shipment to reach a customer —can be a thorn in the side of a retailer. Enter in-store fulfillment.
Benefits of in-store fulfillment
Mounting shipping costs are costly for retailers who are reluctant to pass them along to customers who are looking for the best price for every item, as well as free shipping.
By offering in-store fulfillment, the delivery process can be seamless as customers choose from curbside delivery, click and collect, and buy online/return in-store options.
Employees can address customer requests in real-time, monitor inventory, and deliver attentive service.
In-store fulfillment means retailers no longer have to route products exclusively to a warehouse.
Nordstrom and Kohl’s are excellent examples of putting the strategy into practice.
They can fulfill orders from the store closest to the customer’s location, leveraging their stores as fulfillment centers and shipping orders directly to customers, reducing costs and speeding up deliveries.
Ship-from-store, ship-to-store, and in-store pickup can then be handled with one solution that optimizes in-store inventory usage and reduces the time and cost for fulfilling online orders.
Perhaps the most daunting part of the process is getting a 360° view of inventory by connecting data from e-commerce sales with in-store transactions.
Determining the correct timing for syncing online data and orders with in-store POS is vital; solutions can be configured to sync data at any interval, including real-time, hourly, nightly, or at other intervals that make sense for a retailer’s operations and network capacity.
If syncing lags, inventory can fall behind, and there’s a risk of selling out of products that have already been committed to online orders.
With seamlessly connected channels, shoppers can buy products online and pick them up in the store that same day.
Store associates can receive pick lists to select and package the products ordered online.
Selecting off-the-shelf products increases inventory turn and decreases the duplication that comes with holding a separate online order inventory.
In-store fulfillment completes the frictionless purchasing experience.
Customers get quick, free delivery — often receiving their items even faster than ordering online.
Retailers, in turn, move inventory more rapidly, helping to maintain price stability.
Both shoppers and retailers benefit from a more efficient customer experience.
As a retailer in a competitive marketplace, a major focus should be monitoring the health of your business. For most retailers this means getting a handle on your Key Performance Indicators, or KPIs.
Defining KPIs
A KPI is a metric that is designed to give you a quick snapshot of some aspect of your business. A KPI might be a measure of sales, customer activity, or financial strength.
More than simply a bottom line number, a KPI is usually expressed as a comparison with some other factor. For example, looking at the average sale per customer gives you an understanding of the potential value of each customer.
Which KPIs should I track?
There are hundreds of KPIs that a retail business owner could be using at any one time. If an activity can be tracked and measured in your store, a KPI can be developed to provide you with business intelligence. One of the challenges is to decide on a handful of KPIs that provide you with the most valuable information based on the goals and objectives of your operation.
Every retailer will have a different set of KPIs. For example, a business that uses commissioned sales associates to sell to customers may place a heavy emphasis on KPIs that track the effectiveness of an individual sales associate while these KPIs may be irrelevant for another retail business.
You may want to track KPIs related to your customers. Simply knowing the number of customers who enter the store each day may not be enough for you. You may want to gain a deeper understanding about your customer’s shopping patterns and what converts them from a casual shopper into a dedicated, returning customer.
To do this, you need to carefully consider what data you should collect and analyze.
Choosing the right data
Data, by itself, is not a KPI until it’s arranged in a meaningful way. A list of sales transactions throughout the day is good data to have but it’s not the whole picture. The next step might be to calculate the total dollar amount of sales for the day. You can arrange the data in any number of ways: sales by department, sales by item, or sales by cashier. At this point, you still only have data to analyze.
The strength of KPIs is knowing how to use data to gain a competitive advantage. It all comes down to the goals and objectives you set for your business.
For each goal you establish, you must also create the metric that will determine if you are successful in reaching that goal. Your KPIs become the method by which you track your progress. If your key performance indicators do not reflect progress toward your goal, you must change the tactics you are using in your business.
Using raw data to optimize your retail operations
Let’s look at one simple example of how your goals and KPIs come together to give you a competitive advantage.
Marlene runs a small clothing store in a mid-size urban market. Lately things have been going good but the business has leveled off. She would like to increase her business over the next year. She creates a goal to increase her sales by 10%.
Marlene realizes that an obvious KPI is her total sales. She can also break down her sales on a daily, weekly, monthly, or quarterly basis to compare with the previous year. This gives her the maximum degree of flexibility especially since her sales tend to fluctuate according to well-defined fashion seasons.
Marlene decides that a good strategy would be to do more advertising on radio and television during the coming year. To find out if the advertising is bringing customers into the store, she decides to track footfall, the number of people coming into the store. Fortunately, she tracked her traffic last year but if she didn’t, she could use the new data by correlating store traffic with the dates and times that advertising is running to see if the ads have an immediate effect.
If she notices that store traffic increases for a few days after a television ad appears, she may make more strategic choices about when to run television ads. Or she may be sure to have a special sale during the weekend following a big flood of advertising.
By tracking average customer spend, Marlene can determine how much the average customer spends during each purchase transaction. In order to increase sales, she decides to place some displays with accessories, scarves, and jewelry close to the cash registers. The strategy works and she notices that her average customer spend amount increases due to impulse purchases while customers are waiting in line.
Although her total sales KPI indicates some overall growth, Marlene is not satisfied with the progress she is making. She begins to track her conversion rate, the number of transactions throughout the day divided by the number of people who enter the store. This seems to indicate that a lot of people are coming into the store but not many are making purchases.
To combat this, she could implement a number of new strategies. Perhaps she should take a look at rotating her inventory more frequently so the styles are kept fresh. She might decide that she needs to add new merchandise. Eventually, Marlene decides to hire additional staff to take more time with the customers and help them pick out merchandise.
To maximize the effectiveness of her new employees, she tracks shopper to staff ratio. This KPI lets Marlene determine if she has the appropriate number of employees on the sales floor to handle the volume of shoppers. Monitoring her wage costs, which is wages paid divided by the total sales, will also help her monitor her costs.
As her business grows, Marlene may decide to implement different strategies or develop completely new goals for her business. These goals and strategies may necessitate new KPIs to help her determine if they are effective. As her needs change, so will her data collection requirements and so will the way she analyses that data.
Tracking KPIs in your Retail Pro
Retailers using Retail Pro have several built-in tools to help them track important KPIs easily and automatically, including pre-designed reports that can be accessed in Retail Pro Reports.
Filters allow you to easily report on different aspects of your operation and break down your data into different segments to allow you to take a birds-eye view or get down into the weeds.
Retail Pro reports can also be completely customized. This allows you to save time and money by adapting an existing report to show exactly the information you need without a lot of work and effort.
From inside Retail Pro, you can use customer or inventory statistics to gain more perspective.
X-Out and graphical reports allows you to look at sales activity throughout the day and get instant analysis.
Have a different KPI that makes your retail life easier, or have questions about KPIs? Email us at training@retailpro.com with your comments and questions.
One of the big reveals during the past 13 months is that people need (and want) to shop, and that e-commerce filled that desire both for necessities and luxuries.
Small, neighborhood businesses with no online presence had the toughest time surviving, while online stores with brand recognition — ironically, often due to a brick-and-mortar presence — fared the best.
Most strikingly, big, traditional shopping mall “anchor” stores felt the sting of greatly reduced foot traffic, while also enjoying a significant uptick in e-commerce revenue.
For example, Nordstrom forecasts sales to increase more than 25% this year, with digital accounting for roughly half of all revenue. Malls have been losing foot traffic for years. Moody’s industry research arm Real Estate Solutions (REIS) forecasts that malls vacancy rates will reach 14.6% by the end of the year as retailers regroup post-pandemic and reconsider their store locations.
And yet, customers consistently report enjoying an in-person shopping experience. Nothing truly can replace an experience of being able to touch and feel merchandise.
A case in point is the venerable Macy’s department store, a 162-year-old retail institution, which announced a year ago it would be closing 125 stores in “lower-end” malls during the next three years.
Macy’s strategy was to focus on locations with stronger sales as well as online operations. Then came lockdown and the pandemic era, and as shoppers tried to avoid malls, stores found ways to adapt.
Macy’s mall exodus is not unique; Dillard’s, J.C.Penney, Kohl’s, and Belk are also reportedly looking at freestanding and strip center locations.
Nordstrom, too, has been successful with its small format stores and intends to continue expanding those outlets along with its digital presence as part of its “Closer to You” long-term growth strategy.
Small stores, customer-forward strategies
Photo by Taras Chaban
According to reports, the stores will have full-service and possibly self-checkouts as well as same-day deliveries.
In addition, they will offer “buy-on line, pick-up in store” or “click and collect” service, which often comes with curbside pickup.
Such smaller stores are embracing the concept of offering a curated product selection, a characteristic more often associated with luxury stores. It provides these large retailers an opportunity to be flexible, react more quickly to buying trends and become more relevant to today’s clientele.
By showing a willingness to experiment with innovative merchandising ideas, these prominent retailers may not only rediscover their place in the industry, but also once again become leaders.
Increasingly, retailers are learning that sustainability matters to their customers, and the COVID season did not stop sustainability efforts.
Recycling, energy conservation and reduction of waste are all everyday topics of conversation.
That desire to help conserve Earth’s resources has helped unite customers who may otherwise be very different from one another.
To meet the increasing requests from customers for carbon-neutral packaging and products, retailers are offering more environmentally friendly options. Gartner has recommended three ways retailers could improve sustainability within their supply chains: source responsibly; use recyclable or minimal packaging; incorporate “recycled goods” into product offerings.
Retailers can choose vendor and distribution partners who practice sustainability.
When reviewing vendors, retailers can weigh sustainability as quality.
Sustainability includes processes that mitigate the harmful impacts of pollution and waste on the ecosystem, including reducing freshwater contamination and greenhouse gases.
Retailers benefit too, because sustainable practices such as decreasing energy usage, cutting back on waste generated and eliminating equipment for pollution control lower operating costs.
Many suppliers are coming up with innovative packaging to reduce waste.
For example, dental floss can now be purchased in reusable glass vials, rather than hard plastic packages.
Not only has the product cut back dramatically on waste, but because of its very nature, it creates its own pool of customers who return to buy the floss replacement on a regular basis.
On the recycling side, L’Oreal cosmetics will market its first cosmetics in recyclable paper bottles to consumers this year.
Thrifting — or shopping secondhand—is in vogue, and not solely because items are bargains or bespoke.
Because these goods are living a second life, they aren’t taking up room at the local landfill.
In addition, significant amounts of resources are saved by not creating a new product. For example, making a pair of jeans uses approximately 1,800 gallons of water.
The production process also generated greenhouse gases equal to driving more than 80 miles.
A number of retailers are focused on the “re-commerce” market, such as ThredUp and Poshmark, but some clothing brands including REI and Patagonia are selling their own gently used clothing, similar to the way in which luxury automobiles have sold “certified pre-owned vehicles” for many years.
Retailers wanting to strengthen or embark on a sustainability program should ensure their suppliers are committed to the same long-term vision.
Increasingly, customers are looking to buy from retailers and brands that share their values, and that includes companies that recycle, reduce waste and promote sustainable business practices.
Handling a supply chain is always part art, part skill — but during 2020, it sometimes seemed like it was also part magic act.
Getting products on shelves was a testament to the relationships retailers had built over the years with their suppliers, and only the strongest survived.
COVID inventory crisis
A little more than one year ago, COVID-19 lockdowns began — ushered in by a period of consumer buying never before experienced.
Within days, paper goods and disinfectants were out of stock, available only on the black market for outrageous prices.
A year later, quarantines are gradually being lifted, in some areas more quickly than in others, and most — if not all — of the items once in short supply are reliably back on retailers’ shelves.
A year ago, however, many retailers were forced to close very quickly, with little notice and stockrooms full of inventory.
Those retailers not considered “essential” were left with a surplus of stock that during the ensuing weeks and months became outdated and unwanted; many people weren’t leaving their homes, so foot traffic hit all-time lows.
Adapting stock strategies
Online retailers and brick-and-mortar shops alike depend on good inventory management to run an efficient business.
Now that stores are open on a more regular schedule, their managers are recognizing that inventory strategies must change.
By offering a more curated selection than pre-COVID, retailers can more adeptly handle the ongoing uncertainty in customer traffic and buying behavior.
A number of retailers, including Gap and Nordstrom’s, reportedly reopened with a limited stock strategy, to hedge against a less-than-robust shopping season.
BOPIS challenge
In some respects, offering customers the option of buying online, picking up in-store (BOPIS) saved the day.
Many retailers further simplified the process for customers by offering curbside pickup; customers never had to leave their cars to retrieve their purchases.
By allowing customers the flexibility of purchasing online and retrieving products safely without leaving their cars, retailers eliminated a point of customer friction: Customers had the convenience of ordering online plus, in many cases, same-day pickup.
However, retailers faced the challenge of maintaining the right amount of inventory in stores to keep brick-and-mortar shoppers happy while still profiting from opportunities to move inventory through digital channels.
Stores that came up with the perfect balance will likely continue to offer the service post-COVID because of its popularity with customers.
Visibility into inventory movement
Retailers can only be successful at both in-store selling and e-commerce with accurate insight from trading partners into what is coming in and when.
For example, sending shipment information within two hours of shipment departure, and including scannable barcode labels on all packages can help retailers manage appropriate safety stock thresholds for in-store and BOPIS experiences.
Inventory management tools like Retail Pro also make the process more efficient for retailers.
When ordering merchandise on a multi-store Purchase Order in Retail Pro, a retailer can generate an advance ship notice for each store so each store knows what merchandise to expect.
When the merchandise arrives at the store, managers can generate a voucher from the advance ship notice to receive the items ordered on the PO into inventory.
Recovery ahead
Inventory management pre-COVID required effort and attention to detail.
During COVID, the supply chain was thrust into chaos, as manufacturers slowed production due to workers’ illness at their facilities, and orders fluctuated from exceeding capacity to trickling in.
Post-COVID, in the weeks and months ahead, the economy will begin to recover, and inventory management will face challenges as demand increases and stock levels race to meet it. When vendors are transparent and help retailers plan based on accurate delivery forecasts, retailers will be able to pursue sales opportunities in digital channels, resulting in improved top-line revenue and contributing to a global economic recovery.
For retailers, a unified commerce strategy is built on the foundation of integrated retail technology for an efficient, frictionless customer experience across channels.
Unified commerce gives retailers a smooth, efficient means of transacting business, because inventory, sales, e-commerce, and fulfillment system data is integrated to regularly and automatically keep inventory availability and customer details synced and up to date.
From Point of Sale to e-commerce, from CRM to inventory management, all these technologies need to be connected so retailers have a clear picture of who their customers are and how to provide what they want.
Interaction with customers
Each time a customer enters the retail store, they leave behind a wealth of data for any retailer who can measure their interactions within the store:
What was bought?
What was picked up but not purchased in the end?
What was the dwell time near products that were not purchased?
How long was the customer in-store?
Was this an online pickup?
Did they purchase other items along with their online pickup?
Those answers, when documented with technology, inform a retailer’s back-end systems, so inventory can keep pace with demand, and so marketing teams can keep pace with customer needs.
To collate and analyze that information, retail processes and tools must be intelligently integrated in a retail management platform like Retail Pro to enable sharing of relevant data across both customer-facing systems and those that integrate with backend vendor systems.
Applications from the point-of-sale report on purchases, inventory, and customer data. Sharing this data with an integrated warehouse management system allows warehouse staff to have insight into stock levels currently on the shelves, and to place orders with suppliers as supplies diminish.
Sharing the data with a loyalty and personalized marketing platform like AppCard for Retail Pro allows marketing teams to create targeted campaigns around a customer’s purchase history.
Consistent data across channels
That principle also applies to in-store sales staff—they should have the same product information available as retailers’ online channels.
Integrating your ecommerce software with your POS can give store staff the visibility they need to serve customers who call in to verify stock availability before coming in.
Customers who started their retail journey at home but then switch “channels” to come into the brick-and-mortar store must be certain that inventory is in sync: Surprises such as realizing that products aren’t in stock when the web site said they were there are unacceptable.
Retailers that use disparate, unintegrated systems risk delays in communication because data is manually updated at the end of the day, causing inventory counts to become out of sync and unreliable.
There are a number of technologies that retailers can put in place to provide a seamless customer-facing experience.
Shelf labels and cameras can map consumers’ movements within the store. That helps in product layout for future products, and in product forecasting. They can also indicate where is the heaviest foot traffic within the store.
Beacons can communicate with an app on the customer’s phone to notify them of product sales when customers are in the store’s vicinity, enticing them to stop in.
When integrated with the POS as well, interactions in the app which originated from a beacon trigger and resulted in the ultimate purchase can be properly attributed to track the efficacy of the tools and campaigns put in place.
The connected data then provides insight also on unvoiced customer needs which are nevertheless discernable through their interactions with a retailer’s various channels.
Integrating data in retail technologies provides the foundation for retailers to more effectively determine and act on customer needs for a better customer experience.
The COVID-19 pandemic has motivated retailers to turn to technology to help their businesses plan better, increase productivity, and service their customers.
Contactless payments are one of the areas that, because of COVID-19, will change forever the way retailers do business.
These RFID-enabled payments have been available for years but have surged in popularity during the pandemic.
Not only is contactless more hygienic – in the time of COVID-19, no one wants to touch cash that’s been touched by hundreds of strangers – but it also streamlines the entire checkout process.
While the pandemic may have provided a strong push toward a cashless society, customers could still choose to use a traditional payment card, rather than NFC technology, and be safer from virus exposure during the transaction because they are operating the card reader rather than handling cash.
However, because they use radio-frequency identification, contactless payments reduce time waiting in lines.
The “tap-and-go” process generally results in speedier transactions. While the transaction time for a chip-enabled card can take as long as 30 to 45 seconds, a contactless transaction can be as short as 10 to 15 seconds.
Global adoption of contactless payments
Contactless transactions build upon RFID and typically use NFC technology, the foundation for services such as Apple Pay and Google Pay.
Globally, this method of payment is very popular.
The United States, however, has been slow to adopt contactless payments.
In 2018, only 3% of cards in use in the United States were contactless, compared with 64% in the United Kingdom and up to 96% in South Korea, according to global management consulting firm A.T. Kearney.
OEM mobile wallet transactions were predicted to increase as banks expanded the use of contactless cards.
In the U.S. market, contactless transaction values were expected to rise at an even higher rate than the global market, reaching $1.5 trillion by 2024, compared with the approximated $178 billion in 2020.
Once COVID-19 hit, contactless payments began to surge.
By August 2020, the global contactless payment market was valued at $ 1.05 trillion by 2019 transaction value, and is now predicted to register a compound annual growth rate (CAGR) of roughly 20.01% between 2020 and 2027.
Today, the global contactless payment market value is expected to surpass $ 4.60 trillion by 2027.
Customers have enough friction getting out to the store today. By offering contactless payments, retailers can provide an efficient, safe method for purchasing goods and services while enhancing the customer’s overall experience.
Predictive analytics can help retailers prepare for all types of seasonal happenings, including not only holidays, but also hurricanes and wildfires.
Natural disasters are often seasonal: For example, wildfire season is August-November and hurricane season is slightly longer, starting in June.
While it is impossible to predict the final landfall point of a hurricane or the path of a wildfire, goods can be procured in a way that optimizes costs while considering all path probabilities.
Making accurate predictions regarding the types and amounts of products demanded by consumers is not trivial: Ineffective forecasting efforts result in shortages of in-demand products as well as overages of unwanted products that ultimately must be salvaged.
Focusing predictive analytics on concrete business objectives
It seems paradoxical that predictive analytics uses historical information to determine future shopper actions.
Such retail data might include transactions, sales results, customer complaints, and marketing information.
Retailers use predictive analytics with a business goal in mind.
By harnessing large, heterogeneous data sets into models, they can glean clear, actionable intelligence that helps them achieve their goals, such as more sales, less inventory, and faster deliveries.
Having the right data is key to predictive analytics success. That information may include:
Point-of-sale data
Consumer-related information (e.g., loyalty programs)
Store layout
Online navigation traffic flow
Consumer demography
External factors, such as weather
Retailers can prepare for seasonal shopping by crunching last year’s sales data, combining it with those other pieces of information, and creating a game plan that can meet any storm – or holiday – head on.
The key to retail growth in today’s marketplace is unlocking the benefits of predictive analytics to gain a deep understanding of the customer base to maximize sales, improve inventory churn and increase customer satisfaction.
