The National Retail Foundation’s (NRF) Holiday 2016 update predicts sales to increase 3.6% during November and December. At the same time, online sales are expected to increase by 7% to 10% over 2015. What does this mean to you?
The growth of online spending shines a bright light on how important it is for retailers to serve customers where and when they want to purchase. Many consumers prefer to research online first, then walk into a store for the immediate satisfaction of purchasing a product. Conversely, they may browse at the retail store, then go home to order products online. It has become extremely difficult or impossible to forecast exactly where a customer is going to purchase a product from. In spite of this uncertainty, many retailers inventories are siloed by channel, and fulfillment occurs without consideration of balancing cost and service.
The expectation is that 2016 will be a better holiday season than last year. Are you ready? Do your merchandise assortment, allocation and replenishment plans reflect this projected increase? How are you going to split demand between your various channels? There’s one approach we find to be highly profitable; creating a virtual warehouse from which to allocate inventory to each channel (see #7 in the white paper, Optimizing Retail Allocation: 10 Must-Have Capabilities). This approach blunts the cost of committing it to a single location and then dealing with transfers or, worse yet, markdowns. Are you enabled to do it?
After several hard years, the positive news from NRF portends an upward trend in sales. Are you prepared to take advantage of it?