The retail Chief Marketing Officer’s nightmare …
Continuing our discussion(s) about how the economy, consumers, retail operators and business-to-busniess operators in the retail supply chain are changing. We offer a fable of sorts.
A short time ago in a retail promotional campaign in a land just next door …
- Buyers from the retailer’s organization identify and secure some on the hottest and hardest to find items for the season …
- Suppliers are eager to please the retailer, but require the retailer to make a larger, potentially riskier commitment to some new, less proven items …
- The retailer agrees and the marketing teams from the retailer and the supplier design brilliant campaigns … so strong, even the media partners are excited … so excited that they offer the campaign some attractive bonus placements …
- Preliminary quantity orders are placed … and distributed according to forecast among a number of distribution centers and stores …
- Stores stock and merchandise according to an agreed-upon plan …
And … only 25% of the stores met or exceeded plan …
What happened with the stores that missed the mark?
- 1 in 4 store managers over-allocated their resources to inventory cost management. As such, they suffered more out of stock than predicted, expected or acceptable. Frustrated customers bolted. Confused prospects turned on their heels and walked out. These stores missed their revenue, customer satisfaction and retention, and prospect.
- 1 in 4 store managers over-allocated their resources to out of stock mitigation. Customers were pleasantly surprised that the store had their color and size, in stock. Prospects were converted. But, the inventory carrying cost to do this core out margin.
- 1 in 4 stores managers repeated the mistakes of those above, but, then, made matters worse. Customer satisfaction, so high at first, plummeted … toward the end of the promotional period, the over-stock issue drive the store manager to slash prices to move the inventory over-commit, and while the inventory went down, so too did margin, and customer satisfaction as customers came back looking for the sale pricing and were denied.
The stores that met plan had a distinct advantage over those that did not:
- An enterprise mobility solution that included a small, dense, mobile computing/ communications platform.
- And enterprise mobility software suite that included connectivity to retailer and supplier supply chains to track inventory on the floor, in the stock room and in the chain
- Training programs for associates that had them focusing on all three key elements of the campaign: customers first, merchandising second, inventory management third
Whose mobile solutions are you running?