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/ 11.13.2020 / News,Operation Educate,Retail Tips and Tricks

2020 brought extra challenges to retailers across the U.S., from shutdowns and e-commerce spikes to shifting customer expectations and significant changes in buying behaviors. Inventory management was always an essential aspect of retail success. Today, effective – and flexible – inventory management is proving to be a determining factor in how quickly businesses adapt to the new retail reality. 

Expecting the unexpected has long been a basic business principle for retailers. But predicting potential challenges and evolving trends isn’t always easy. However, when it comes to inventory management, there are three potential disruptors that every retailer should recognize, understand the implications, and establish a contingency plan to address. 

Disruptor 1: Supply chain interruption

COVID-19 put a spotlight on the impact supply chain disruption can have on a retailer’s ability to meet customer demand. Eighty-two percent of retailers have changed their stock management approach as a result of the pandemic. But the truth is, supply chain disruption was already front and center. 

Until recently, most retail supply chains were built to serve a single channel distribution, whether it was brick-and-mortar or e-commerce. As customer expectations around speed and convenience increase, retailers have been shifting to multi-channel – and then omnichannel – strategies. The pressure is on supply chains to keep pace. 

To prevent a disruption in your supply chain from impacting your customers and your revenue, experts recommend increasing the number of suppliers you work with, extending lead times for ordering, and, in some cases, increasing stock levels. Each of these steps requires a real-time understanding of your inventory, the stock-turn times for different items, and the ability to identify fluctuations and adapt immediately. 

By leveraging automated reports produced through an integrated point-of-sale (POS) system, you can effectively monitor stock movement. Daily, weekly, and monthly reports can help you avoid both the costly consequences of both out-of-stock and overstocking issues.   

posim q4 2020 cornerstone cro covid 19 changes

Related: 5 Essential Facts Your Inventory Management Reports Should Be Telling You

Disruptor 2: Changes in demand

The combination of the pandemic and economic uncertainties highlighted how fast consumer demand and buying behaviors can shift. Strategic inventory management enables retailers to pivot and capitalize. And adjusting quickly is business-critical. It’s estimated that retailers miss out on $1 trillion in sales each year because they don’t have the items customers want in-stock.

Staying in sync with evolving buying behaviors requires a deep understanding of who your target customers are, along with strategic, accurate inventory forecasting. The good news is retailers have more data than ever to help them build detailed customer profiles and predict which items to stock up on. 

However, inventory forecasting is a balancing act. Too much inventory in stock probably means you’re tying up too much capital. Out-of-stock situations send customers to your competitors. The reality is 73 percent of retailers say inaccurate inventory forecasting is a “constant issue.”

Make your POS system your centralized data hub, integrating customer, sales, and inventory data from both in-person and online channels. Then define, aggregate, and automate the reports so that it’s easy to tap into the data detail you need to spot and respond to shopping trends. 

Related: Turn Your Retail Data into a Competitive Advantage

Disruptor 3: Obsolete products

Even with the best forecasting capabilities, ending up with extra supplies of products that decline in popularity or get replaced by something new and improved is inevitable. The secret to minimizing the negative impact on your business is the ability to identify slow-selling items and act quickly to cancel pending orders and sell the remaining stock.

Two regular reports to produce and monitor via your POS system are best- and worst-selling item reports. Looking at these views each week or month will alert you when sales begin to slow for particular products. When it comes to getting rid of slow-selling items, get creative. For example, bundling them with other products or creating a pre-packaged kit are opportunities to move the products without requiring deep discounting. Explore how your POS system can help you set up and track these types of packaged sales as single products.

Anticipating and minimizing inventory disruptors are vital in today’s retail environment. POSIM is a point-of-sale and inventory management system that delivers integrated inventory data and robust reporting capabilities for retailers. Discover what’s possible with POSIM. Contact us for a demo today. 

Learn more about inventory management

For additional insights into inventory management, download our guide, Countdown to the Holidays: 10 Steps to Optimize Inventory Management and Increase Sales.

Chris Fair

Product Manager, POSIM Software

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