Estimated reading time: 5 minutes
The holidays are right around the corner, which means the busiest season in retail is just about to hit. ‘Tis the season for empty shelves, stocking issues, and a shortage of all the most popular gift items this year.
Today, major brick and mortar retailers and suppliers face issues of stock shortages year-round, but the effects are felt more acutely during the holiday retail rush. Too often, customers who are ready to buy find empty shelves where merchandise should be. Misjudgments, poor product placement and incorrect pricing can make products unavailable, which in turn makes for disappointed customers. Those customers can wind up in someone else’s store, or even online—a serious problem for retailers trying to survive digital competition.
There are a few key concepts to touch on when explaining to your customers why they should consider upgrading or implementing a new inventory management system in their retail business.
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The Seven Percent Rule
When it comes to consumer goods, 7 percent of items are off the shelf at any one time.
For in-demand products and promotional items, the rate is worse – 10 percent of those are missing from the shelves. Even when products are nominally in-stock, they might be improperly priced for a given region, or placed incorrectly in the store.
It’s all about managing and monitoring retail execution: understanding how customers perceive and interpret the end-user’s displays and making sure they’re consistently stocked. A recent CPG Matters survey tells us that almost three-quarter of retail stores don’t have a system for managing and monitoring retail execution. You can help your customers fix this by suggesting they collect data about how customers perceive and interpret their retail displays.
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Brand Loyalty Has Changed
With the rise of digital retailers, fewer niche markets, and more overall competition, consumers just aren’t as steadfastly brand loyal as they used to be. When it comes to larger purchases, they may stick to brand lines, but for smaller gift ideas, it’s all about convenience and price.
When an item is out of stock…
- Up to 43% of customers find another source
- 25% of customers don’t make a purchase at all
- 22% of customers settle for another, usually cheaper item
Since shoppers are more likely to go elsewhere for their purchases, sales are more likely to be lost by your customer when their stock falls short. Be sure to impress upon them this important concept – their customers won’t wait around for a new shipment of toys, electronics or other gifts this holiday season.
Spelling out the problem is an obvious (but essential) first step; most suppliers and retailers agree on what can go wrong. But showing your customer that solving the problem means going beyond traditional tactics like periodic spot-check audits is equally important. Spot-checks might give temporary peace of mind, but they tend not to generate long-term solutions. Your customers want consistent visibility of the retail environment, and that means you need to offer the kind of diverse and robust toolset that only a good retail stocking solution can provide.
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How to Determine the Need
The solution your customer needs should provide real-time information, including photos of store displays, as well as ways to share and interpret that data. Taken together, numbers and visual information tell the whole story of how your customer’s products appear in the marketplace. Once you can see what’s happening on the ground, in front of their customers, in real time, you’ll be in a better position to understand their overall needs for an inventory tracking system.
Choosing the right solution depends on three things: the business model, the solution software, and the solution hardware.
Their Business Model
It’s important to take into strong consideration the business model at play here, so you can better identify the holes in inventory management, the needs their customers may have, and the overall function of the company. Be sure you’re knowledgeable about their industry specifically, and where they operate geographically. Consumers behave differently in different parts of the world, and if your customer has a global reach, you’ll need to provide some kind of international experience. Also consider the size of their business, how much product they’re moving on average, and what their shipment schedule may be. The more complex the company, the more help they’ll need from their inventory solution system.
Software
Highlight the perks of your software, and what it can do. Your end-user will likely be unaware of what features they do and don’t need, or even what the software may be capable of accomplishing. Be sure to highlight the intricacies of the software, and impress upon them how much more efficient the solution will be than continuing to operate without it, taking the risk of human error.
The user interface will be of some concern to your customer. Chances are their field team was chosen for their sales skills, not their IT expertise, so they’ll want software that’s easy to learn, transparent, and compatible with inherited legacy data. That will keep their people happy and reduce their turnover rate.
Finally, you want to be able to show them that they can use this solution to work and gather data offline. Be careful here—a lot of applications claim to be functional offline, but will be missing critical features without an Internet connection. Be transparent about the connectivity about your solutions, and how this will affect any data gathered.
Hardware
Some retail execution solutions providers include hardware as part of their offerings, while others will make recommendations involving other vendors. Be sure you let your customers know whether you can provide both. If you only sell one but not the other, consider your partners and what solutions you can recommend from them. Either way, you need to make sure they can test the hardware before making a buying decision. Make sure their front-line staff are satisfied with the functionality and ease of use of the devices they’ll be carrying, because that’s critical to their adoption rate and eventual success.
It’s best if these devices have cellular capability, because that ensures more consistent data. Reps will be able to connect in the field on a busy day, sharing information, saving time, and increasing efficiency.
Once upon a time, a brand could sell itself. A well-established supplier or retailer could count on sustained customer loyalty. Nut now a reputation for quality and reliability is only the beginning. Fierce competition from global suppliers and online retailers demands constant high performance in order to win and keep customers. Fortunately, you can help your customers bend purchasing trends in your direction if you ensure that their inventory management system ensures products are always available, properly priced, and effectively displayed.
