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Smart Merchandising

Are your Business Decisions Hurting your Bottomline? Its Time to Rethink your Discounting Strategy

Offering excessive discounts during the sales season can be quite tempting to clear ageing inventory, however, discounts not only slash profit margins significantly but, if done without the right strategy, can impact your brand image. Once customers get used to low price points, they can become reluctant to buy at full price and end up waiting for the clearance sale to make their purchase. This behaviour impacts regular cash flow, and brand reputation, and dilutes customer trust in the genuineness of the price. 

A good pricing model paired with an effective discounting strategy helps maximize business growth and promote sales without hurting the business. Here are some discounting techniques to make your business more profitable.

  1. Flat discounting vs Slab discounting

Applying a flat/blanket discount on all products can shoot up discount payout dramatically, affecting profit margin by treating them all the same. Rather than offering flat discounts, brands can give higher discounts on selected assortments, e.g. seasonal items or refurbished items, and earn higher margins on good inventory. This kind of slab discounting helps brands earn better margins by discounting the products right based on their true value. Increff Merchandising solution is designed for flexible discounting, it allows retailers to adjust prices on a daily basis, based on fluctuating customer demands. 

  1. Gift-with-purchase (GWP) & Purchase-with-purchase (PWP)

Offering a free gift with purchase is an effective cross-selling strategy that helps customers get excited at the prospect of saving money and getting a higher value for a bundle of products. Offering customers an option, e.g. “buy two, get one free”, can be a smart way to reduce discount pay-out and clear more stock. Another sales promotion technique, PWP, offer discounts only on the purchase of a second or third product. This is to entice customers into buying a threshold of products to avail of the offer. 

Both strategies ensure that products are not devalued or the brand reputation is not diluted. However, if the discount is not well planned and executed, there is a high risk of giving away expensive stock which could cause serious losses to the brand.

  1. Right marketing strategy during discounts

Expiry dates and limits on discounts help build a sense of urgency that urges customers to make the purchase before meeting the deadline. It’s difficult to ignore compelling CTAs, or calls to action. Statements like ‘Exclusive offer to the first 30’ or ‘Get it NOW before it’s GONE’, are persuasive strategies to raise a sense of scarcity that pushes customers to take immediate action.  

Right visual merchandising

Attractive store-front and catchy window installations, in-store displays, racks, eloquent signage, point-of-purchase displays, etc. can be good techniques to attract customers. Once inside the store, eye-catching story displays, appropriate lighting, attractive interior designs, easy-to-navigate store layouts, etc. help create a delightful, customer-friendly environment. Increff Merchandising solution considers business constraints of planogram and operating plan to design a store plan. A well-planned store encourages customers to spend more time in it, thus exposing them to maximum merchandise and boosting chances of sales. 

  1. Spread out the discount period

To accommodate the rush and avoid system glitches, it’s best to spread out the discounting period. Brands often struggle with a sudden spurt in customer footfall due to a lack of floor space, staff, or the right technology. The same is true for online shopping where a sudden spike in web traffic can cause server issues, or create bottlenecks in the supply chain. Rather than offering discount sales for one or two days, it is highly recommended to extend the period to a week or more and avoid operational nightmares. Integrating a robust technology solution for inventory and order management can help brands avoid order cancellations, delays in order fulfillment, and poor customer shopping experience.  

  1. Reward loyal customers

Instead of offering the same discounts to existing customers, it is far better to personalize offers and add value for loyal customers. They are the business builders: they buy more, pay premium prices, and bring in new customers through referrals. Realizing the benefits of loyalty requires an admission that not all customers are equal. In order to maximize loyalty and profitability, a company must give its best value to its best customers. Offering gift coupons, discount vouchers, and loyalty points to buy groceries or other fast-moving products from a partner brand, or getting a healthy discount on frequently purchased products like milk, vegetables, and cereals can encourage customers to buy more.

  1. Offer discounts to first-time buyers

Customer acquisition can be a formidable challenge. Apart from offering rewards and offers to loyal customers, it is beneficial to prioritize first-time buyers. By taking them through the rabbit hole of your offerings, brands can encourage first-time buyers to try new products. This strategy has successfully been used by fashion brands such as H&M and Bloomingdale’s in the form of offering 10% off on the first order. 

  1. Track your promotions

Track your marketing campaigns to know how effective they are. Online Analytics module in Increff Merchandising solution helps you understand the changes in page views and conversion rates, through which you can understand how effective promotions were. You could take appropriate calls to retain, increase or discontinue the offers on the products.

  1. Do smart buying

If your core idea of discounting is to get rid of excess inventory and make space, do smart buying in the first place and avoid the clutter of excess inventory. Increff tool helps you create efficient buying and reordering plans that will let you keep the optimum level of inventory. With this, you will also suffer fewer stock-outs and sale losses connected to the same.

Final thoughts

When creating a discounting strategy, avoid having a one-track mind. Instead, mix and match your options and use ample creativity to boost sales, reduce pay-outs and enhance the customer experience. Make discounting decisions 2 times faster with Increff Merchandising solution, Markdown optimization module, and sell more at the right price. 

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Smart Merchandising

Optimize inventory distribution this holiday season with Increff MS Pro

As an established brand/retailer with a healthy spread of brick-and-mortar stores, in-season planning involves optimal inventory distribution to all points of sales. In-season planning can be categorized into, new season allocation, at the launch of the season, and mid-season replenishments and replacements. Planning involves budget allocation, trend analysis, past sales analysis, etc, which gets half of the job done, but the incorrect distribution leads to a failed season.

There are a lot of factors like store capacity, variety of options, depth of the style/SKU, grade of the store, assortment mix, etc. that are involved in optimally distributing the available stock across multiple points of sales (PoS). Incorrect allocation leads to overstocking, understocking, and loss of potential sales which affects the top and bottom line.

After the new season allocation, the inventory has to be replenished based on the current sales trends to keep the sales momentum going. The health of merchandise and identifying the right stock for the right store are major factors that have to be considered during the mid-season.

Since the whole process involves a lot of resources, time, and accuracy, new-age solutions like Increff Merchandising Solution can automate the process by reducing the number of resources required, the time taken for completing the process, and increasing the accuracy.

USPs

  • Attribute Group-based new style allocation: Existing styles can be allocated based on their historic performance at the stores, which is not straightforward for the new styles that don’t have any sales history. MS Pro uses attribute group performance for new style allocation.
  • Style-Store Ranking: Placing the right inventory at the right PoS is very important in catering to customer demand. MS Pro uses style-store ranking based on the historical performance of the style at the store and allocates the inventory to the best store followed by the second best, and so on.
  • Maintaining inventory health: Inventory health plays a major role in the Rate of Sale (RoS). It is observed that the styles that don’t have important sizes available at PoS are unlikely to sell. MS Pro maintains inventory health by identifying the key sizes of a style during distribution.
  • Individual PoS analysis: Every PoS, both online and offline, has a unique customer base and the behavior of the different points of sales is different. Grouping the PoS in clusters and analyzing clusters is not as effective. MS Pro considers each store to have an individual identity and defines the right assortment and key sizes based on past performance in that store for optimal inventory allocation.
  • Maintaining fill rates at stores: Fill rate is the maximum inventory that can be stocked in a store. MS Pro maintains optimal fill rates at the store by using the planogram as a constraint.
  • Seasonality-based assortment: Seasonality is an important concept in retail, especially in fashion as certain products have demand during a certain period. Eg., Jackets, sweaters, and other winterwear apparel are sold mainly during winters and have low demand during other seasons. MS Pro helps define the assortment plan based on the ongoing season.
  • Rollup-based allocation: The allocation of the inventory is done at different levels when the right amount of data points is not available at any level. Eg., for any style, the data at store-AG is not available, a few rollups are done at the store-category level or store-category-subcategory level, and allocations are done at that level.

 Impacts Delivered

  • 13% increase in-season full-price sell-through for one of the largest celebrity brands
  • 25% revenue growth and 4% improvement in margin for one of the largest lingerie brand
  • 13% reduction in inventory brokenness, for a leading formal wear brand
  • Reduction in inventory holding from >120 days to 80 days for a leading lingerie brand
  • 90% reduction in stock allocation & buying process for all the brands
  • 13% improvement in stock health season on season, though regular replenishments and allocations for a leading formal wear brand 
  • 45% additional sales from the same set of styles with 34% reduction in brokenness through Inter Store transfers for a Global Men’s Casual-wear Brand
  • ~21.5% reduction in inventory quantity for a targeted increase in revenue by 17.3% for one of the largest health and beauty marketplace 
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Smart Merchandising

Recover from post-pandemic data & sales loss with smart merchandising

The Economist, in 2017, referred to data as “new oil”, the one ingredient every business needs to drive the world ahead. Covid, classified as a “black swan” event, shook the entire social and economic status quo, and further emphasized the importance of intelligent data analysis and smart decision-making. Brands and retailers had to take a fresh look at strategy and planning. Digital sales channels took precedence over offline stores enabling brands to take an omnichannel approach. Planning an efficient supply chain, to get the right product at the right time to the right person, became imperative.

Data analytics helps make strategic business calls and design processes, thus building supply chain efficiency, and fostering innovations. Businesses need to rely on data analytics to make quick business decisions in weeks, rather than months. 

Increff smart Merchandising Solution – MS-Pro and MS-enterprise, is making strides in data analytics as diverse data is processed by patented algorithms to produce downloadable reports that can be visualized in UI.

  • Descriptive data analysis is provided through Business Intelligence dashboards. Here, dynamic performance analysis can be done with visualization techniques over historical data.
  • Predictive analytics is used to identify past sales, revenue, discounting, sell-through, and other factors from past data to predict future behavior.

It helps in accurate demand planning and distribution to ensure the right products reach the right customers at the right time. A 10-20% improvement in demand forecasting can reduce 5% of the inventory cost, which as per McKinsey and Company, contributes to up to a 2% to 3% increase in revenue.

The pandemic influenced how people perceived and purchased products which were reflected in the drastic switch in brands with fluctuating demands. This dynamism was important to capture with data analytic tools so brands can identify buying patterns and capitalize on them.

Increff smart merchandising solution is designed to adapt and grow with the changes in the market.

  • Results can be produced season-wise or period-wise depending on the purchasing and distribution pattern of the brand or retailer. It occupies budget crunches or expansions and optimizes accordingly. 
  • Dynamic data-churning help cut down the length of production cycles and adapt to quick changes in the market.
  • It gives the option to pick and choose an analysis period where a considerable amount of data is available. Data gaps can be identified while analyzing the data from similar seasons or sales periods that can be used to replace them.
  • Ability to measure a set of attributes to track the performance of particular products and forecast demands accurately. This can be derived from the few basic sets of data, available with all brands. From here the tool can churn out right from planning to distribution to online analytics.
  • The UI is clutter free and designed to create easy access for everyone. Easy usage cuts down man hours to a few minutes and enables the team to have maximum flexibility.
  • Tools account for spikes and ridges in sales and smooth out any irregularity, thus making the results more accurate and avoiding false positives due to any season-end sales or extreme dips due to temporary shutdowns.
  • Modules such as regional utilization and Inter-store transfer help to cut down on logistic time-cost and increase efficiency in supply chains. This would help your business stay afloat even in sudden supply chain disruptions. Tuning Inter-store transfer with the tool will eliminate human delays as well.

Intelligent Increff Merchandising Solution helps retailers put their best foot forward when it comes to planning inventory and allocation. The adaptable and dynamic nature of the tool helps brands cope with the natural data loss, similar to what happened due to business shutdowns during the pandemic, and take calculated decisions for steady business growth.

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Smart Merchandising

4 Myths on Store Sales Maximization

As the marketplace becomes increasingly competitive by the day, store managers are dealing with a tremendous amount of pressure to maximize sales, meet targets and boost profitability. In the last couple of years, the conditions created mainly by the pandemic have only added to that pressure and compelled brands to explore new options and innovative practices. 

But these have also given an impetus to a lot of myths surrounding supply chain management, four of which we are going to bust in this blog. So let’s get started!

Myth 1: Keep 100% inventory in stock to fulfill any order that may come

This could be one of the most tempting ways to ensure no sales opportunities are lost, and customer satisfaction is maintained at the highest possible levels. But having all your inventory in stock will raise your carrying costs sharply and may also result in a lot of stockpiles. 

The way forward instead is “rightsizing” your in-stock inventory and leveraging the services of your trusted suppliers for delivering on time. The future of profitable supply chains in fact lies in how well you are able to balance between in-store and Just-In-Time (JIT) inventory.

By building shorter supply chains, you can make your business continuity plans more robust and avoid disruptions that are typical of long and winding supply chains. Another crucial factor is your ability to integrate and coordinate with local and last-mile partners. These not only understand the immediate customer cluster better but also make a lot more logistical sense for your brand.

Myth 2: Calculation in Excel is easy. The new-age merchandising tool can be complex & time-consuming

Well, this statement is highly illustrative of your inertia to grow and evolve as a brand! Excel is great for storing and manipulating data and generating forecast reports. But it is a generic tool that will seem too primitive for the growing challenges of today’s marketplace that demands automation, specialization, and speed.

New-age merchandising tools may appear rather formidable or complex. But in reality, these are exactly the opposite. The great thing is, that these do not work on a rip-and-replace model and can easily be accommodated into your pre-existing systems. These are highly adaptable and operable as plug-and-play solutions. 

Myth 3: Discounting will increase sales & help earn more

Discounting could be a good short-term ploy to get the aging stock off your shelves and make room for fresh products. But using it indiscriminately could be rather counterintuitive and harm the stature of your brand in the long run. More immediately, it will reduce your margins and have serious implications for the overall profitability of your products.

What you really need, is to be able to use discounts in combination with data-based insights, from new-age merchandising solutions like Increff Markdown Optimization. These help you figure out what percentage of discount to use at what time and which store locations, so as to boost sales while maintaining healthy profit margins.

Myth 4: Forecasting the right width and depth is sufficient to improve inventory turnover

For starters, forecasting can give brands a foundational idea about the expected sales and demand patterns for the upcoming season. But in a fast-changing marketplace, a lot of in-season changes could upset even the most elaborately designed plans. 

For instance, fashion brands being highly influenced by cultural dynamics could suddenly experience a spurt in demand for a certain style, after a movie release. Likewise, a supply chain shock due to strikes, conflicts, or calamities could put significant pressure on some parts of your supply chain network.

Dealing with these dynamic market conditions in highly disruptive times requires you to think on your feet, rather than putting your supply chain on auto-pilot mode. New-age merchandising solutions allow you to do exactly that, by giving you insights into in-season changes in demand. Responding to these changes using inter-store or inter-warehouse transfers can be highly effective when backed by real-time data from across your network.

To sum up!

Sales maximization is obviously the most sought-after goal for every brand. But in the hoard to achieve their targets, brands could often fall for unfounded myths and unproven strategies that could hamper their growth or cause serious damage to their reputation. To keep evolving in the face of fresh challenges, formidable competitors, and volatile market conditions, brands need to keep an eye out for the latest technologies, cutting-edge processes, and robust strategies. 

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Business Smart Merchandising

5 Ways to Control Inventory in the World of Lean Retailing

The fast-changing retail industry is increasingly adopting a customer-centric approach. Customers have a wider array of options and are no longer willing to buy whatever brands offer them on a platter. In the past, retailers used to purchase merchandise based on their gut instinct or mere hunches. But today, staying relevant in the market calls for a scientific and data-driven approach. 

The growing dynamism of customer preferences also means that brands can no longer pile up stocks indiscriminately in their warehouses, as this could lead to wastage and obsolescence. This is where lean retailing comes in!

Lean retailing is all about ‘rightsizing’ your inventory and maintaining a minimal stock while relying more on the JIT deliveries as and when a product style is demanded. Lean retailing is a highly data-centric and customer-oriented supply chain practice and calls for strong supplier relationships and seamless communications. It enables businesses to cut down on unnecessary carrying costs and avoid the innumerable risks of overstock.

In this blog, we take a look at 5 simple methods you can adopt to make lean retailing a roaring success.

Regular replenishment of stock

To ensure reducing your in-stock inventory doesn’t impact your day-to-day sales, it is necessary that you replenish your stores and warehouses regularly. Optimum replenishment of stock aims at keeping your inventory costs low, while still being able to meet customer demands on time.

The optimum rate of replenishment is determined based on the data related to customer demand and preferences, and also the physical storage available with the brand. These can be factored in using inventory management software which can help brands arrive at the optimum reordering levels and also the timings of stock replenishment.

Redistribution of stock with inter-store transfers

A pre-season forecast of demand is necessary and can provide a fair idea of the customer behavior patterns over the longer time horizon. But developments during the season can also impact the trends and thus brands need a more proactive approach to ensure no sales are lost. For such contingencies, inter-store transfers are a great way out.

The inter-store transfer allows easy circulation of stock from areas of low demand to those of high demand. It is very effective in improving the health of your inventory, reducing stock brokenness, and supporting omnichannel distribution.

Suggest pullbacks for dead/slow-moving inventory

Slow-moving inventory doesn’t just occupy space on your shelves, it also prevents better-performing products to be exposed to the market. Besides, the longer your products lie on your shelves, the greater are the chances of damage, eventually making them completely unsuited for sale. 

It is necessary therefore that you identify your slow-moving stock early by tracking your inventory regularly. After zeroing in on the slow-movers, pull them back either into the warehouse or transfer them to another store if there is a likelihood of better conversions.

Expose offline inventory to online sales channels

Omnichannel commerce is fast emerging as the most disruptive trend in retail, and the lines between offline and online sales channels are blurring fast. Exposing offline products otherwise lying in your physical stores can enhance their conversion manifolds and boost sales.

With automation-based solutions like Increff Offline to Online (O2O) solution, brands can get a single view of 100% of their inventory across the board through a simple UI. As soon as an order is received, fulfillment can be done from the store or warehouse closest to the customer, thus saving significantly on logistical costs and dramatically speeding up the delivery. O2O can however be made possible only by having complete transparency and traceability of the entire inventory.

Faster re-commerce to avoid stockpiles

As brands expand their presence and achieve greater sales levels, returns can also grow proportionately. Handling returns efficiently with automated solutions is necessary to ensure the quick resale of the products. 

Increff WMS allows brands to sort the returned products on the basis of their condition. Subsequently, the items can be resold through your own sales channels, or redirected to secondary markets as second-hand products.

Faster re-commerce prevents damage due to delays and prolonged transportation, and thus loss of value. This helps optimize the resale value of the returned goods and avoids stockpiling low-value items in the inventory.

Maintaining a lean inventory is the way forward when it comes to building streamlined supply chains to meet the needs of an intensely competitive, dynamic, and customer-centric marketplace. Lean retailing however comes with its own set of challenges, most of which can be mitigated with some proactive planning and smart tactical decision-making.

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Business Smart Merchandising

Inter-store transfers; An inventory optimization solution

You have probably heard about the concept of inventory optimization, but do you know how to make the most of it?

Inventory management is a tricky business. Too much inventory and you are tying up valuable resources that could be used elsewhere, too little inventory and you risk losing sales. What if there was a way to optimize inventory to always have just the right amount in hand? A way to ensure ideal inventory at all times?

Maintaining the right quantity of inventory required to meet demand, keeping logistics costs low, and avoiding common inventory issues such as stockouts, overstocking, or deadstock — make optimized allocation and replenishment in inventory management essential for any retail business. Store-to-store or inter-store transfer effectively manages seasonal and geographical demand fluctuations and is an effective way to optimize inventory. 

How does Inter-store transfer (IST) optimize inventory? 

Demand forecasting is vital for any retail business, but it is not perfect. Demand forecasting often fails, resulting in too much or too little inventory. One way to mitigate the risks of demand forecasting is to use store-to-store transfers to optimize inventory. Inventory management is a crucial part of any retail business. Too much inventory can tie up capital and lead to stockouts, while too little can result in lost sales. Inventory optimization is the process of finding the perfect balance between these two extremes, and store-to-store transfer is an effective way to optimize inventory. 

This technique also ensures that all stores of the retailer have the right mix of products in terms of colours, sizes, fit types, etc., while reducing overall inventory levels and costs. It also improves customer service levels by reducing stock-outs and increasing the availability of products. Overall, it is a powerful tool to help retailers improve their inventory management and bottom line.

Optimize seasonal inventory management with IST

There are several benefits of using inter-store transfers to optimize and better manage seasonal inventory. The very concept of a season has been re-defined in modern retail. Some retailers choose the conventional path of four seasons in a year, viz, Spring, Summer, Fall, and Winter. At the same time, retailers like Zara do twelve seasons in a calendar year, which means new stocks in the stores every month. With significant variations in climatic conditions within a country and during the same period, a store in a warmer climate could be selling more of a different product type than a store in a cooler temperature. Real-Time Data analysis can enable timely Inter store transfer to ensure that stores have the right inventory to meet customer demand.

When inventory is not selling at one location, it can be transferred to another site where it is more likely to sell. This helps businesses avoid the cost of storing excess inventory and better utilize their space.

The Role of technology in Inter-store Transfers

  • Technology Solutions to ease inventory optimization

Technology solutions can help retailers optimize their inventory levels and improve customer satisfaction. Inventory management software can provide insights into customer demand patterns and help retailers plan inter-store transfers to avoid stockouts. 

With real-time data and automated processes, retailers can quickly and accurately identify where inventory needs to be transferred to optimize their overall inventory levels. 

Additionally, tools like predictive analytics can help retailers anticipate trends and plan inter-store transfers accordingly, further enhancing customer satisfaction levels. 

The right technology solutions help retailers:

  • Analyze demand patterns and make recommendations
  • Conduct new-season and mid-season replenishments, 
  • Automate replenishment of fast sellers, 
  • Adjust inventory for seasonal changes and spikes, 
  • Consolidate stock sizes between stores 
  • Avoid stock-outs or over-stocking in any particular store or season

Critical Advantages of Inter-store Transfers

  • Minimizes Dead Stock, i.e. inventory that sits on shelves and never sells. It is a waste of money and resources, as it ties up valuable space in your store. Transfer inventory that is not selling in one store to another store where it might sell better.
  • Helps reduce stockouts or overstocking in stores. Ensure your inventory is constantly moving and never stuck with inventory that you cannot sell.
  • Enhances ROS by making the right product available at the right location 
  • Helps manage seasonal demand spikes
  • Supplements mid-season replenishments 
  • Better inventory turns by allocating stocks in the most appropriate locations 
  • Enhanced customer satisfaction

There are a few things to keep in mind when using Inter-store Transfers. 

First, it is essential to have a good understanding of your inventory levels and needs. Second, Store-To-Store Transfer should be used in conjunction with other inventory management techniques, such as just-in-time (JIT) production and Kanban systems. Adopting a robust inventory management solution with JIT, Kanban, Allocation & Replenishment, etc., tools built-in can make Inter-Store Transfers easier.

Finally, Store-To-Store Transfer may not be a panacea for all inventory problems. Still, it can be a valuable tool in your inventory management arsenal when used efficiently with the help of intelligent software solutions available today.

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Smart Merchandising

5 Extremely Useful Techniques to Boost Store Sales

While online shopping rises in trajectory, stores have continued to remain highly relevant. In the US, over 85% of retail still happens in physical stores, while ecommerce still represents a small percentage of total retail sales, that is, only 14.5%. 

Stores are widely known to add an element of localization to the business. Having a strong local presence is essential to establishing a brand identity and creating a meaningful personal touch. Customers continue to visit stores to experience the products physically and test them in person before purchasing them. 

In this blog, we take you through the top 5 highly useful techniques to boost store sales instantly.

  1. Maintain the health of your stock

Make sure every product has an adequate number of sizes and styles. Have enough XL, L, M, and S sizes for each product. By eliminating or reducing stock brokenness, there is the least likelihood of losing sales and revenues. To maintain the health of the stock, brands can use techniques like auto-replenishment or take measures like inter-store transfer or transfer from the warehouses. Data analysis has a significant role to play in maintaining the health of the stock as it can give brands a fair idea of the potential distribution curve for various sizes and styles.

2. Boost inventory exposure to maximize sales

A lot of challenges in modern inventory management lie in the lack of visibility across different markets and locations. This becomes all the more complex as omnichannel overtakes retail businesses and demands better integration among various channels. 

Improving integration and ensuring a seamless connection between ERPs and warehouse management solutions can drive inventory exposure significantly. Making the right inventory available in the right stores as per regional demand means enhancing the likelihood of conversions. It also helps increase the turnaround time and avoid unnecessary discounts by selling at just the right price on the basis of the local demand. Increff Offline to Online (O2O) helps expose store inventory to online consumers to increase sales conversion by enhancing product listings. 

3. Placing the right inventory in the right stores

Cutting-edge BI and accurate assortment planning help place the right products in the right stores. Demand analysis can keep brands abreast of the trends in regional demand and enable them to respond accordingly in terms of assortment planning. Demand analysis is not an ad hoc step, but a continuous process of evaluation of demand to enable better decision-making and create more accurate product assortments. 

Likewise, Regional Utilization has an entirely local focus and enables brands to make products available as close to the customer clusters as possible, besides reducing costs of logistics and delivery.

4. Top seller/core style identification 

Once brands are aware of their top-selling products or are able to identify the core style of their customers, they can have the right product mix in the right quantities. Each store could have a different top-selling style, shaped largely by factors such as local fashion outlook or cultural inclinations. Teaming a white shirt with blue jeans is a universal fashion favorite that brands must have in adequate quantities across stores so as not to miss out on sales opportunities. 

Conversely, it is also very helpful for brands to keep tabs on their slow-moving products so that they may avoid overstocking these items and freezing precious financial resources. Slow-moving products could be cleared faster using deals and discounts. 

5. Identification and pullback of dead stock

Brands must keep a vigil on the velocity of their products, especially the slow movers that can be cleared using markdowns. In case some products aren’t sold off despite using these tactics, brands must proactively identify the dead stock and pull it back into the warehouses. Alternatively, some products could also be shifted to other stores where they could be in demand in their local markets. This opens up the shelf space for better products that could attract buyers and help attain higher conversions for the brand. Replacing the dead stock with products that are trending in the market is simply a great way to boost sales.

Brick-and-mortar stores are unlikely to fade away anytime in the foreseeable future. Rather than ignoring this crucial source of revenue, brands must craft proactive strategies to pull customers into the stores, boost their conversion rate and raise a healthy revenue. The above-given tips are a proven solution to meet the growing challenges of physical store retail in times of the rapidly growing online retail industry.

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Smart Merchandising Technology

Seasonal Inventory Management: New-Season Allocation & Mid-Season Replenishment

In today’s retail environment of fast fashion, retailers have to replenish their inventory constantly. One of the main challenges faced is finding the right balance between being proactive in forecasting demand and reacting to changes in supply and demand.  

Seasonal inventory management is a business method used to manage inventory allocation and replenishment most cost-effectively and efficiently. The right seasonal inventory management plan can help a business understand its demand patterns and anticipate future demand. This allows retailers to plan their stock levels, new-season allocation, and mid-season replenishment efficiently. 

The first step in seasonal inventory management is to understand customer demand patterns. This can be done by analyzing past sales data and trends. Retailers can also use market research and surveys to gather information about customer preferences. Forecasting demand is tricky, therefore retailers need to consider several factors, including the season, upcoming events, and trends. If demand is overestimated, retailers could end up with too much inventory. On the other hand, retailers could miss out on sales if demand is underestimated.

The next step in seasonal inventory management is developing a plan for allocating and replenishing inventory. Retailers need to decide how much inventory to keep in hand, and how often to replenish and distribute among stores.

Critical Elements of Seasonal Inventory Management

Predictive Demand Forecasting: Predictive demand forecasting uses past sales data to project future demand. Merchandisers can use predictive demand forecasting to plan inventory levels and product mix to have the right products in stock when customers want them. Predictive demand forecasting is essential for seasonal businesses, like retailers who sell summer clothes or winter sports gear. By looking at past sales data, retailers can predict how much demand there will be for specific products in the future and plan their inventory levels accordingly. This ensures that they do not overstock on items that customers do not want to buy and helps them avoid stockouts of popular items. To make predictive demand forecasting more accurate, retailers can use multiple sources, like point-of-sale data, customer surveys, and weather data. This can help them account for changes in customer behavior and demand patterns. Retailers often use various methods to forecast demand, including trend analysis, statistical forecasting models, and market research, to get an accurate picture of future demand and plan their inventory levels accordingly. Merchandisers need to be aware of the latest demand forecasting methods and technologies to make the most accurate predictions possible.

New-Season Allocation: Product allocation is the process of distributing new products to store shelves. When allocating new products, retailers must consider the product’s popularity, shelf life, and the available space in stores to maximize sales and minimize stock-outs. New-season allocation involves organizing how much inventory should be allocated to be sold in the upcoming season. There are a few things to keep in mind when doing this:

– The amount of inventory allocated should be based on data for past sales patterns. If demand was high, then more inventory should be allocated. If demand was low, then less stock should be allocated.

– Allocating too much or too little inventory can be costly. If there is too much inventory, it ties up working capital and can lead to markdowns, too little inventory can result in lost sales.

– The goal is to have the proper inventory to meet customer demand without tying up too much working capital.

Mid-Season Replenishment: Mid-season replenishment involves rearranging inventory during a particular season. If a retailer seeks to maintain optimum inventory health, they will need to replenish before running out of stock. Mid-season changes in demand can be challenging to manage. If demand increases, there may not be enough inventory on hand to meet customer demand, which can result in lost sales. If demand decreases, there may be too much inventory on hand, which will tie up working capital. One way to handle mid-season changes in demand is to redistribute inventory across stores. This can be done by transferring inventory from stores with excess inventory to stores with low inventory levels. Store-to-Store or inter-store transfers will help to ensure that customer demand is met without tying up too much working capital. Modern warehouse technologies are a good investment for optimizing the mid-season replenishment process or making operations leaner. 

Auto alerts for low inventory levels: Retailers can use inventory management software to set up auto alerts for when inventory reaches a certain level. This allows retailers to replenish stock at the shortest lead time, which can help avoid stockouts and lost sales.

Auto-Replenishment of fast sellers: Replenish fast-selling items automatically to ensure they are always in stock while avoiding overstock of less popular items.

Inter-Store Transfers: An inventory redistribution method where inventory is transferred from one location to another. This type of transfer can be used to redistribute inventory based on changes in demand or to avoid stockouts at a particular site. Merchandising solutions can help retailers plan and execute inter-store transfers to minimize the impact on sales.

Adjusting inventory for seasonal fluctuations: Seasonal changes can significantly impact inventory levels. Retailers must be prepared to adjust their inventory levels to account for increased demand during holidays and other peak periods. They may also need to adjust their inventory to account for changes in demand due to weather changes.

Conclusion

Seasonal inventory management can be a complex and time-consuming process. However, it is essential for retailers to stay ahead of the competition and maximize sales. With the right inventory management strategy, retailers can manage seasonal changes and maintain healthy inventory levels. New-age merchandising solutions can help retailers track seasonal trends and make the necessary adjustments to their inventory levels. Auto replenishment of fast-selling items can help ensure that popular items are always in stock while avoiding overstock of less popular items. Inter-store transfers can be used to redistribute inventory based on changes in demand or avoid stockouts, and maintain healthy inventory levels at all times. 

With an effective seasonal inventory management strategy, retailers can increase customer satisfaction and keep inventory costs under control. A well-defined merchandise plan helps retailers tackle the challenges of seasonal inventory management by understanding customer demand patterns. Retailers can thus ensure that they always have the right products in stock.

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Smart Merchandising

Retail assortment planning; Creating a winning product mix & depth in stores

Creating a winning product mix and depth in stores is one of the biggest challenges for the modern retailer. The rise of online shopping, and the growth of e-commerce, have made it even more challenging for traditional retailers to keep up with demand in today’s dynamic omnichannel marketplace.

The rise of e-commerce has been good for consumers in many ways, but many still prefer to shop in stores, which means that retailers need to create a winning product mix and depth. At the heart of any successful retail business lies effective assortment planning. This refers to creating and managing a carefully curated product mix and depth in stores, ensuring that each location offers products that are well-suited to its target customers and market environment.

What is product mix and depth? 

A retailer’s product mix and depth can significantly impact consumer behaviour and sales. The mix refers to the type of products you carry, while depth refers to the number of SKUs or items within each category. Getting the mix and depth right is essential to ensuring that stores can meet customer needs while also maintaining efficient inventory levels.

What is assortment planning in retail?

Assortment planning in retail creates a winning product mix and depth for stores. Some of the critical elements of retail assortment planning include maintaining inventory health, reducing out-of-stocks and stock-outs, and identifying bestsellers. 

Retail assortment planning aims to have a product mix and assortment that meets customer expectations and demand.

To achieve this goal, retailers need to use new-age merchandising tools and assortment planning software to provide integrated inventory planning capabilities and instantly downloadable reports at multiple stakeholder levels. This creates a comprehensive, single repository of inventory data from all sales channels. A complete view of their product offerings’ depth and mix at the individual store level enables retailers to make more informed and data-driven decisions to optimize inventory management.

New-age assortment planning software also helps retailers use individual style analysis tools to identify the bestsellers among their products, focusing efforts on maximizing sales for those items. With such software solutions, retailers can quickly analyze historical data to determine the true potential of each style at the store level and identify store-specific assortments that take into account the unique characteristics of each location.

Conventional excel charts with limited capabilities due to manual input processes will not suffice in today’s thriving and fast-changing consumer trends.

There are many advantages to effective assortment planning in retail.

It helps:

  • Maximize sales and profitability by ensuring that stores are stocked with the right products in the right quantities. 
  • Reduce inventory levels and associated carrying costs while also lowering out-of-stocks and stock-outs.
  • Create a more seamless customer experience by ensuring that stores always have the products that customers are looking for. 
  • Using data and analytics to understand customer needs and preferences better, assortment planning can help retailers stay ahead of shifting trends and respond quickly to new opportunities in the market.

The retail product assortment solution optimizes your product assortment planning enabling retailers to maintain good inventory health by tracking inventory levels on an ongoing basis and identifying any products that may be at risk of stock-outs. This allows for better decision-making about which products to keep in-store and online and how to adjust the mix and depth of products to meet customer demand.

Finally, it is essential to have a system to review and update your assortment plans regularly. This may involve regularly reviewing sales and inventory data and conducting customer surveys and focus groups on staying on top of evolving trends and preferences. With the right assortment planning strategy and approach, you can create a winning product mix and depth in your retail stores that will help you drive sales, profitability, and customer satisfaction. By using new-age merchandising tools, retailers can comprehensively view their inventory, identify bestsellers, and prevent stock-outs. They can create a winning product mix and depth to keep customers coming back for more.

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Smart Merchandising

The Art of Merchandise Planning for Omnichannel Retail

While brands are increasingly taking to the digital space, physical stores continue to play an important role. Two ways in which physical stores can complement online channels are by acting as local fulfillment centers and being an easy contact point for receiving returned goods from customers. 

Omnichannel poses a number of challenges for optimizing operations, capturing maximum sales, and ensuring the highest levels of profitability. This has implications for retail strategy, information flow, physical flow of products, supply chain management, and last-mile delivery. Most importantly, it impacts retailers’ merchandise buying and planning decisions. 

Analytics, Forecasting, and BI

Accurate forecasting at all times is essential for the right buying and planning decisions. All the information relayed back from the market is put through smart algorithms that enable retailers to take the right future-focused merchandising decisions. 

In omnichannel retail, data streams from multiple POSs, capture, and store relevant data thus it is critical to ensure the integrity of the repositories. Data related to past customer purchase behavior, bestsellers & Never-Out-Of-Stock styles, seasonality, and festive purchase behavior, facilitate inventory planning and buying decisions. This requires an effective Merchandising platform to integrate data from across channels, enabling retailers to take the decisions with ease and agility.

Apart from leveraging conventional past data, Business Intelligence (BI) plays a critical role in a highly competitive marketplace. Timely customer-related information and BI can help retailers outdo their competitors and stay ahead in the market. With omnichannel retail, you can expect plenty of market-related intelligence and information flowing in. The big challenge is to process, analyze and represent that information effectively to enable accurate planning and decision-making. 

Retailers must integrate information across channels, use it to gain customer insights, and design growth strategies accordingly. Merchandising solutions help in gaining a competitive edge as it is impossible to manage and utilize massive, multifaceted data using conventional tools like Excel sheets. (read more)

Getting the right assortment at the store level

Placing the right assortment at the right store is critical for capturing maximum sales. Gathering information on customer preferences, past purchase behavior, and their response to discounts and promotions, coupled with robust BI analytics helps stock the right inventory.

Smart assortment plan

Fashion brands are experiencing increasing complexity due to the wide range of product styles with varying customer demands. Sub-optimal assortment planning and buying can result in overstocking or understocking of items at the store level, which amounts to inefficient distribution. 

With an end-to-end merchandising solution, retailers can leverage data to develop a smart assortment plan and achieve optimal store allocation. Using over 300 algorithms, the solution ensures accurate decision-making with the help of product clustering, store-style ranking, and the inclusion of seasonality and visual merchandising. A smart merchandise allocation plan also ensures the consistent availability of NOOS (Never Out Of Stock) styles in stores.

By ensuring the right product clustering, width, and depth of the product, automation-based merchandising solutions enhance the likelihood of conversions. They also help decide the true size-set ratio at the store level, leading to minimal size cuts. The solution keeps track of the inventory health, lead time, depletion rate, and reorder quantity, to create an ideal buy plan for each store-style combination.

Optimal store allocation

Optimal store allocation is achieved through regular replenishment and inter-store transfer of goods from low-performing stores to high-performing stores for better sales. It aims at ensuring that every single item reaches the right store. Allocation of a new store is determined by comparing the features and product assortments of similar stores nearby. 

In the context of omnichannel retail, a real-time assessment of the common pool of inventory both online and offline is important to stay up-to-date about the availability of inventory at all times. Customized reports for every stakeholder level, from CXO down to the merchandiser level facilitate the merchandising decisions at each level.

Integrate Multiple Plans into a Single Multichannel Plan

Retailers need to integrate individual plans tailored for each channel into a single multichannel plan that boosts sales, margins, fulfillment rates, and inventory turns across the whole business.  Increff Omni OMS allows retailers to expose offline inventory to customers online so orders can be placed at any point of sales and fulfilled either from the stores or the nearest warehouse, thus providing a unified shopping experience to all offline and online shoppers. 

Smart assortment planning tools help with individual store planning and forecasting, down to the SKU level. Real-time inventory updates and faster order fulfillment ensure higher margins and profitability. As omnichannel becomes the future of retail, brands experience greater reliance on tech-based Merchandising solutions that enable automation in decision-making, conduct advanced business analytics for strategizing, and facilitate forecasting at all stakeholder levels for faster business growth.