Collections and Markdowns and BOGOs — oh my!

As the seasons and styles change, many retailers are faced with a dilemma: what to do with the left over inventory. Markdowns, clearance racks and BOGOs become the norm to make way for the new season or the latest collection. These sales may seem like a “great deal” or a “bargain” for shoppers but they are actually a result of poor forecasting and the inability to keep up with “rapid replenishment.”

Today retailers must plan and allocate more frequently with shorter seasons while satisfying consumer needs across multiple channels. Tie in competitive pressures and a multitude of supplier risks and you get a very complex operation that places enormous stress on already thin margins.
Here are five tips to help retailers minimize markdowns, increase sell-through and boost margins:

1. Automate Replenishment
Omni-channel requires immediate response to changes in demand or you risk losing the sale. Today, retail is still dominated by spreadsheets and slow, manual processes. Automating replenishment allows the team to focus on value added activities which leads to reduced out-of-stocks, higher inventory turns and greater employee satisfaction.

Video — Groupe Dynamite: A Responsive Replenishment Strategy

2. Create Pre-Packs
Ordering and moving inventory in pre-packs containing an array of sizes can bring significant operational efficiencies. In the distribution center, pre-packs replace the labor intensive process of put away, picking and packing store assortments. This significantly impacts cost per unit shipped and minimizes the amount of people that “touch” the supply chain (and add cost).

3. Operate a Virtual Store Warehouse
The Virtual Store Warehouse allows retailers to hold back inventory and ensure it’s on hand when needed for a specific store or channel. This is extremely helpful for locations with minimal backroom space to hold inventory. The Virtual Store Warehouse greatly improves efficiency and allows planners to cost-effectively allocate inventory across the retail network to give each store the best opportunity to achieve its financial plan.

4. Implement Multichannel Planning across the Business
Demand volatility and the lack of system maturity to manage has been consistently cited as a cause of concern for many organizations. According to the BRP Merchandise Planning and Allocation Benchmark Survey, more than 60% of respondents still rely on spreadsheets or homegrown solutions to meet today’s complex planning and supply chain challenges. Retailers need advanced software that supports omni-channel operations with one aggregated pool of inventory that can be allocated and replenished across channels.

5. Customize for Specific Markets and Channels
Retailers need to dynamically assort stores into multiple volume ranges within a store attribute type, then leverage attributes such as vendor, color, fabric and silhouette for consideration and analysis in the assortment planning process. The allocation process can be directly linked to the assortment plan, or modified as needed to reflect product receipts and current store needs, while remaining visible across the organization. This provides each retail location with the best chance to meet its financial targets.
With these tips in mind, how are you transitioning to an omni-channel model to deliver exceptional customer service?

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Karin Bursa

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Karin Bursa

Short bio

Executive Vice President, Logility With more than 25 years of experience in the development, support and marketing of enterprise software solutions, Karin is able to provide The Voyager Blog several provoking perspectives including market-shaping events, end-user perspectives and technical reviews. She is a widely quoted source on the evolution of the supply chain, frequent author to many leading publications, and can be found speaking at many of the industry’s leading conferences. Supply Chain Brief

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