Inventory Availability and Product Choice as a Source of Competitive Advantage
The way we buy has come a long way over the years and the retail industry has made giant strides in improving speed, convenience and variety. While many retail leaders are embracing cutting edge technologies and innovative store concepts to try and carve out a differentiated brand position, a renewed importance is being placed on mastering one of the fundamental disciplines of retail - optimising product choice & stock availability. It’s an innate human trait to seek the most efficient and harmless way to achieve a task - shopping is no exception. Consumers want to try, buy and receive their goods in the quickest and most effortless way as possible – usually all within the same day. Without effective product assortment, inventory and fulfilment management, it’s hard to meet these expectations. If you’re not stocked up with ready-available, suitable product solutions in-store or online, customers are unlikely to perceive you can efficiently fulfil their needs.
The average retailer loses 4% of potential revenue due to customers buying products from other retailers when items are not immediately available for purchase (1).
Those retailers who can exceed customer expectations and offer the quickest and easiest access to a selection of the best products to meet their needs, can secure a powerful source of sustainable competitive advantage in their category. The financial impact of increased eCommerce and in-store sales can be profound. Retail Express customers see an average of $120,000 increased annual profit per store by enabling such strategies. (Check out our free calculator to see how much you could add to your bottom line).
Endless Aisles – The Panacea
The renewed focus on product assortment and inventory management as a source of competitive advantage has led to the concept of an Endless Aisles strategy. It refers to retailers pursuing a business model where each of their stores and channels is able to leverage all inventory across their entire supply chain to maximise product availability and choice, and optimise the fulfilment experience for customers.
In its purest form this would mean customers have full access to a retailers inventory whether they step into a physical store or visit their eCommerce site. Endless Aisles usually involves a wide range of systems and practices including Automated Inter-Store Stock Transfers, Click & Collect and In-Store Stock Check, In-Store Kiosks and Drop Shipping.
Drop Shipping is a key area of functionality where a retailer can dramatically increase their product offering beyond what they commit to hold inventory for. Physical retail space can be maximised, as the store can hold the best-selling items only (in limited numbers), but still have the ability to order or send items directly to the customer. As well as providing product choice and maximising the likelihood of inventory availability (avoiding lost sales from understocking), an Endless Aisles approach means a wider range of fulfilment options are available to maximise speed and convenience. Shoppers can choose from the purchasing channels that provide them with the most efficient and enriching experience.
The Online Endless Aisles Experience
By providing access to all your in-store inventory (and potentially all of your suppliers products via dropship processes), you can dramatically increase your eCommerce sales. Real-time visibility and improved availability of stock means you’re less likely to see abandonment due to stock outs and more likely to win the sale. By using live inventory data based on what’s actually available in your supply chain and home delivery fulfilment ETAs, you can set the right customer expectations.
To truly stand out you need to meet and exceed customer expectations around fulfilment speed. Systems that identify the optimum location (store, warehouse or supplier) to ship from means you can achieve next day, same day or even shorter home delivery timeframes. Where you don’t have stock immediately available, the ability to provide real-time confirmation of delivery time can be another means to secure the sale. Providing the widest range of fulfilment options is going to improve customer choice and maximise your likelihood of winning the sale.
Offering Click & Collect and In-Store Stock Check based on real-time in-store inventory data can drive visits to your local stores where you can leverage effective cross-selling, up-selling and loyalty program processes and drive higher sales and margins.
Achieving a true Endless Aisles offering online depends on advanced, integrated omni-channel inventory and supply chain management systems that work across your different sales channels.
The In-Store Endless Aisles Experience
Bricks and mortar stores can embrace the Endless Aisles concept and provide maximum choice and stock availability by store employees having established processes for:
- Automated Inter-Store Stock Transfers (or home delivery) from other locations
- Selling off inbound purchase orders
- Drop-ship fulfilment from your suppliers
- Interactive kiosks or tablets that allow store visitors to browse (or employees to showcase) your entire product range
Again, achieving Endless Aisles in-store depends on having advanced retail management systems across your network and supply chain that standardise and automate processes.
Fulfilment Is Critical to the Endless Aisles Experience
An endless aisle strategy should be directly linked to consistently providing the best customer experience. Ultimately, it’s about providing the customer with what they want, as fast and conveniently as possible. Offering access to stock from a wide range of locations and channels is not enough for Endless Aisles strategy to be a source of competitive advantage. In order to thrive with this strategy, retailers need to optimise their inventory and fulfilment locations and processes so there is stock available nearby that can be fulfilled within a timeframe that meets or exceeds their expectations. An advanced Retail Management Systems like Retail Express will ensure this. It will automatically look at the optimal location and fulfilment method for the customer and provide an accurate, data-driven ETA to set a realistic expectation.
It’s All Down To Your Retail Strategy & Systems…
Even more importantly, retailers need to develop their Endless Aisles capabilities with their overall retail strategy in mind, basing it around the question: ‘how we are going to win in this market?’. They need consider who their buyer personas are and what matters to them; then devise a unique competitive positioning strategy that allows them to best meet those needs. It may be that guaranteed stock availability and fastest fulfilment for a small, core selection is what matters for some customers segments and that’s more important to focus on rather than providing the widest choice. In that instance, an Endless Aisles capability should be build focusing on optimizing inventory availability and fulfilment speed for that small core selection range. In short, your competitive strategy should guide your Endless Aisles approach.
Once a suitable strategy for the application of the Endless Aisles concept has been developed, suitable retail management systems are going to be a pre-requisite for success. Without the right systems, you won’t be able to setup the integrated, automated omni-channel processes that are required for Endless Aisles to be effectively executed.