Recently, I worked with a retailer whose management of inventory didn’t put them into the top 10 of effective merchandise managers. For one thing their point of sale system was not linked to their merchandise management system.
They spent a large part of their time at head office time “converting” this data via excel spreadsheets so efficiency, speed to market and competitive advantage was buried under a mountain of laborious time consuming data entry.
Merchandise management is the art/science of having the right stock in the right store at the right time. Driven correctly this discipline has enormous positive benefits on a retailer’s sales, margins and cashflow. Only a handful of retail management/POS systems extend this discipline into systemisation. As a retailer’s business grows in size or complexity the need for such systemisation with proven retail management products become critical.
Here are our seven key questions to ask when looking for the ideal fully integrated merchandise management system.
If the POS system is different to the back office, the system is not integrated. If the merchandise management occurs via spreadsheets, the system is not integrated. If the report writer is not the same as the system – it is not integrated.
Hardware/fashion/food & beverage/supermarkets, etc all have different merchandise management needs. Ensure your vendor is an expert in your part of the retail market. Generalist systems/manufacturing systems/inappropriate systems add time and complexity to the retailer’s life.
OTB is the retail measure as to whether forward orders are above or below the needs of the business relative to anticipated sales performance per product category. OTB management prevents over or under stocks – both of which are very dangerous to retailers.
For example, systems that do not plan and manage markdowns are not advanced and will ultimately cause undue tension in your OTB management processes.
Especially in multi site retail environments with high seasonal fluctuations, the correct first drop of product is critical if the retailer is to maximise the sales opportunities of the season.
Over and under stocks, especially of key items, are a disaster for the retailer. Ensure your system is on top of re-stocking in an intelligent manner so that stock levels are always at their optimum. These functions can be automated. The higher the integrity of these processes, the less time your staff will spend on such AND the higher the accuracy level will be.
If you sell seasonal stock, such automation provides a powerful first line of management at season end – rather than discounting. The margin benefits are obvious.
If you have more than five stores and do not confidently answer yes to all of these questions, you are missing out on additional sales and margins that good fully integrated merchandise management systems can bring. If you are planning to grow your business aggressively you will need such systems. Fully integrated merchandise management is a must with all advanced retailers. There are a plethora of companies out there with a range of systems.
Brian Walker is Managing Director of Australasia’s leading retail consultancy, the Retail Doctor Group. For more on Retail Doctor Group’s Effective People program email businessfitness@retaildoctor.com.au.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
Comments