Inventory Management

Many U.S. adults have plans to return gifts they received this holiday — more than 21 percent said it's very likely that they would return holiday gifts they didn't like. Meanwhile, 32 percent said it would be at least somewhat likely. It may be tough to know whether or not a gift that's been given is going to end up in the returns pile, as more than 78 percent of U.S. adults said they have pretended to like a gift they've received even if they didn't like it.

Retailers are in the midst of the holiday peak. While the sales peak ends at Christmas for most, the inventory returns peak is yet to come. This annual phenomenon invariably creates waves, especially if you sell products with typically high return rates (e.g., footwear and apparel).

One of my favorite moments from NEMOA's Fall 2011 directXchange Conference was when Country Curtain's President Phil McAvoy said the following during his keynote speech: “Don’t be a hero at budget times.” His point is that you should already have contingency plans in place so you can respond to the inevitable challenges that arise during the year. Be a hero when it counts — at the end of the year when you meet or exceed your budget.

Every retail company I talk with seems to feel that its inventory challenges are unique. Large cross-channel retailers contend with the variability of demand planning by channel and the complexity of communicating assortment plans between merchandise and inventory planners. Small internet retailers often run out of best-selling products because they don’t have the staff resources to stay on top of their buying needs. Catalogers are forced to plan and analyze product-level demand by offer. B-to-B retailers struggle to have the right amount of inventory by SKU for that unexpected large order.

Holiday plans, merchandise assortments and inventory purchases are pretty well in place by now for most cross-channel retailers. But since many businesses gain such a high percentage of their sales and profits in the fourth quarter — as much as 60 percent — it's never too late to see what additional things can be done to increase sales and customer satisfaction.

Increasing investment in back-end systems is a natural and predictable trend for the maturing internet retail industry. That investment will help push internet sales higher while simultaneously increasing operations and inventory efficiencies, resulting in higher profits. 

Any company’s long-term success depends in part on its ability to perform quality product-level profit analysis and accurate demand and inventory planning. Your product marketing, merchandise planning and inventory planning functions can all benefit from detailed square-inch analysis. So, regardless of the primary purpose of your catalog, you’ll be best served if you have the tools and processes in place to capture and report your product-level advertising exposure and expense.

Barneys New York Chief Executive Mark Lee says Prada is no longer selling any new goods at Barneys (except shoes and menswear) in what he said was fallout over pricing and inventory control.

It all started with a click. Or was it a call? Or could it have been that direct mail piece? In a world with seemingly endless customer touchpoints, if you don't know what's driving your customers to your business, you're not alone.

Retailers have a paradoxical love-hate relationship with their peak season. For most, peak volumes coincide with fourth quarter holiday shopping, when it's not uncommon for 80 percent of the year's orders to come in at once. Scaling a retail operation to process five times its average order capacity is no small feat. For two months of the year, many retailers nearly break their backs to accommodate the seasonal business that will help sustain them through the other ten months. If last year's fourth quarter pushed your business to the brink, now is the time to learn how to build a better inventory plan for 2011.