The secret sauce of Walmart is "enslaving" vendors to manage inventory
Amazon and omni-channel are sexy topics that grab a lot of retail press. But at the end of the day, Walmart is the largest retailer on the planet, and the second largest company in terms of revenue. To continue to grow and remain profitable is a remarkable feat given the size of their worldwide operation. And, Walmart is never one to rest on its laurels! We've posted previously about Walmart's Lab, ventures in social media, and its own initiatives in "long tail" ecommerce. Yet, if there is a secret sauce that makes Walmart successful, it is mastery of using data to hold suppliers accountable in managing its inventory and in stock rates for them!
Online knows everything about you … stores are not sure you were there
The old saying is "build it and they will come". One of the greatest challenges for retailers today is they are not exactly sure if you will come, or in fact track if you did. Traffic X Conversion = Sales. While much of the current focus on "consumer experience" has been to improve conversion performance, comparatively little has been done to track and improve store traffic. In contrast, online retailers know an amazing amount about you as a consumer, how you shop, where you went on their web site, shopping cart traffic, closed sales and how you left their online store. Most retail stores are barely able to count if someone came in.
The retail tightrope of balancing inventory and keeping shelves stocked
So, you decide you will go to the store after all to make a purchase. You want see the color, style and touch the actual product. After fighting through traffic, you finally reach the shelf only to find empty space. Unfortunately, the % of items out of stock is increasing in many areas of retail. In trying to balance inventory costs, retailers are willing to risk being out of stock. As a result, both retailers and suppliers are losing significant sales. And, the real question is will you, the consumer, come back to the store after being disappointed multiple times?
There seems to be two buzz phrases in the headlines these days: “big data” and “analytics”. In working with a number of Fortune 500 clients, there certainly is no lack of data. Executives don’t lack data; they need more business intelligence to answer some very tough business questions. One of the hottest buttons of the C Suite today is “business analytics”. Just what is “analytics” and whose job should it be in today’s big data world?
Why retailers & vendors must address shelf availability
In these economic times, retailers have pressed so hard for lean inventory that now many of their high volume stores are often out of stock. If the item is missing from the shelf, consumers are quickly turning to online retailers. Out of stocks represent “low hanging” fruit for capturing lost sales, and profit potential without additional market spend. As typical in retail, this sounds enticing. But, the harvesting this opportunity requires visible inventory and collaboration between both retailers and vendors.
Have retailers lost the art of managing assortment?
To be fair, the new normal of retail is change at an ever increasing pace. Retailers are not just competing in stores, but online and on mobile devices. Yet, as many as 75+% of consumers still purchase in store, at least for consumer electronics. In the frenzy over competing on ads, promos and price, retailers have tended to neglect their most important job of managing assortment. If management can’t answer the basic question of why consumers shop their stores, they are in deep trouble!
Your shopping cart is about to become a data center
No one thinks much about the lowly shopping cart in the store. It first appeared at a Piggly Wiggly in 1937. For the last 70 plus years the cart has remained baskets on wheels to help customers gather goods for checkout. All that will change when your smart cart gets its “new brain”. The computers being added to new shopping carts will be able to customize offers … and track your every move in store!
IBM research says higher the heel the bigger the fall
Now, here’s a bit of interesting economic research by IBM which identifies a leading economic indicator you may have missed. IBM Global Business Services has identified an economic predictor based on what fashoenistas are wearing on their feet. In economic downturns, the heights of heels on women’s shoes go up and stay up. So, ladies do your part to spur the economy … ditch the stilettos and go buy some flats. Seriously, is there any science behind any of this?
Missing KPIs mean lost opportunities for both partners
Earlier this year IMS had an opportunity to complete a review of top US retailer scorecards. This past week at the VCF Fall Conference there was a unique opportunity to participate in simultaneous dialog with retailers and vendors on metrics and scorecards. The clear take away is that scorecards are far from balanced. But, the real gain for both partners will come from joint scorecards focused on profitable life cycle management.
Proxy metrics vs. measurement design required for ROI
It’s a tough world out there in this economy. In order to compete on more than price, companies are trying to differentiate by investing in customer service. Retailers are spending more on everything from hiring and training better sales people, to using social media to enhance service and follow-up. Do investments in customer service yield a better ROI than marketing? The slippery slope of ROI requires more than just metrics to analyze what produces an incremental gain in sales and profit.
