As retailers are struggling to keep inventory levels up-to-date both in store and online, lack of planning has resulted in out-of-stocks, overstocks, and returns that have cost them nearly $1.75 trillion a year—a number that, unfortunately, is only growing.
According to a 2015 IHL Group study, the largest financial loss for retailers is due to bad processes, which account for a nearly $285 billion loss. In the first three months of 2017, nine retailers have sought bankruptcy protection, and some are even calling this new era the “Retail Apocalypse.” More chains and retailers are continuing to close doors as they struggle to survive in the omnichannel era.
The State of Retail Today
When Macy’s closed 15 percent of their stores last year, their CEO blamed “higher inventory than planned” and “lots of leftover inventory.” Looking ahead, “planning and strategy” are two topics they will look to focus on to continue to keep doors open and customers satisfied. When asked, it’s no surprise that 29 percent of retailers blame poor processes that account for their overstocks and out-of-stocks. Streamlining backend operations for this imperative planning cycle not only enables retailers to buy only what they will sell, but it retains customer satisfaction by getting the right product to the right person at the right time.
“Retailers all too often focus on a variety of ways to drive revenue and increase comparable year-over-year sales, but retailers can realize huge gains by addressing opportunities that are in hand and slipping through enterprise fingers,” said Greg Buzek, president of IHL Group. “These problems are within retailers’ grasp to solve, but it requires more than data, more than business intelligence. It requires understanding the root causes of inventory and data disconnects and implementing the technology solutions and operational changes to address these revenue-limiting issues.”
Better Inventory Planning Leads to Customer Loyalty
When it comes to customer loyalty, planning matters. Forty-seven percent of retail consumers chose not to shop again at a retailer with poor fulfillment transparency or delivery processes. Providing customers with a transparent fulfillment process not only increases the likelihood that you’ll retain them, but helps to avoid wasteful inventory and allocates time for proper forecasting. Ultimately, planning leads to streamlined operational efficiency of your retail business— no more, “whoops! That item you just ordered is actually out of stock” emails, delays in shipment, or overstocked shelves.
According to the same study, retailers are losing $223 billion due to data disconnect; when retailers are able to track operational issues on a single platform, they have the greatest opportunity to recapture lost revenue.
How Stitch Helps Brands Manage Inventory and Increase Customer Satisfaction
Fortunately for retailers, there are tools that can help better forecast and minimize out-of-stocks and overstocks, and ultimately streamline the entire backend process of inventory planning. Stitch Labs offers a single, trusted data source that captures forecast demand and helps to maximize margins and drive cross-departmental decisions.
Prior to using Stitch, Andrew Singh, VP of Purchasing at LowCarb Canada, was spending at least 15-20 hours per week managing inventory. By manually creating and updating purchase orders and ballparking order estimates, Andrew created a situation where stockouts were more prevalent than he would have liked. By implementing Stitch, he was able to better forecast demand based on real-time data and flexible forecasting.
“A stockout is a potential for loss. We’ve managed to keep everything in stock while our next shipment was on the way. I attribute that to Stitch. I can say without a doubt, whatever Stitch guides me to buy, I’ll buy,” Singh said.
On average, retailers are seeing a 30 percent increase in reporting efficiency with Stitch. Proper forecasting and sales history reporting provides access to editable forecasts, and fast, up-to-date analysis of why past years performed the way they did. Because of Stitch, LowCarb Canada is able to make more intelligent purchasing decisions, and worry less about inventory issues. Customers continue to remain happy and Andrew is able to focus his time on larger-scale purchasing decisions.
As retailers are able to utilize customer data and forecast demand, they can make more intelligent decisions when it comes to planning, purchasing, and even creating new products.
To learn more about how your retail business can improve and streamline your critical backend operations, download Stitch Labs’ Inventory Lifecycle Guide.