Retail: Retail's Final Frontier?

This is the last of a three-part series examining the current and future state of brick-and-mortar retail and how it’s being integrated into other forms of retail. Parts 1 and 2 ran in our June and July issues.

The nature of the internet business model allows more centralized inventory control and more efficient order and fulfillment management than a retail store network. And of course with centralized fulfillment, online merchants don’t incur the cost of distributing inventory around the country, or even throughout a region. In addition, they can extend or cancel promotions depending upon demand and inventory levels.

Consequently, lost sales due to out of stocks, excess inventory and the need for clearance sales are all minimized. All this improves any company’s margins.

But what about the customer who absolutely needs to look, feel and touch an item before making a purchase?

Back to the Future?
One retail chain we work with is testing the concept of converting its stores into showrooms. The idea is to have limited inventory at each store — just enough to allow customers to handle items and try them on if they want. But then all orders are fulfilled from a centralized warehouse and shipped to the customer. A big step forward in increased cost efficiency.

Online inventory management also provides the opportunity for “just-in-time” strategic marketing initiatives not possible in a fixed distribution environment. We’re in the process of building a home-entertainment planning microsite for a major cookware marketer. Depending upon the information a visitor provides about an upcoming event, the site can offer just the right products to meet that visitor’s immediate needs.

What’s more, the internet lets merchants test new product ideas, pricing, presentation and promotional concepts quickly and easily in real time — and without a lot of risk — against small, but representative, samples of a customer base.