Which stock should retailers reinvest in this year? This article outlines the different ways that retailers can decide which stock to reinvest in.
As the retail landscape becomes more complex, how can retailers consistently identify and invest in stock winners? With customers purchasing across channels including but not limited to instore and online via websites, eCommerce marketplaces and social media platforms, Iain Coplans, founder of Stok.ly, discusses how retailers can stay on top of demand planning and purchasing, using multichannel software.
Investing in the wrong stock may result in a number of negative outcomes. Cash flow may become tied up in slow-moving stock, increasing your cost of stock held and reducing your ability to invest in profitable lines. Investing in the wrong lines may damage your relationship with customers, reduce your profits and at worst, threaten the ongoing viability of a business.
Investing in the right stock is likely to improve cash flow, improve your profits, enhance relationships with customers, reduce your cost of stock held and perhaps most importantly, free up cash to invest in more winners.
Selecting the right multichannel software for your business is the first critical success factor in successful demand planning and purchasing.
A data-driven approach to Demand Planning and Purchasing
They say, “data is king”. The right multichannel software for your business should deliver a big picture view of your sales performance across all the channels you participate in.
Yet to understand which products drive profit in your business, the devil lies in the detail. To access the detail, you will benefit from reporting and insight tools that enable you to click through to more granular data on each channel, category, and supplier. This detail provides clarity on your winners and losers and removes personal bias or anchoring bias that may otherwise influence your buying decisions.
It is common to see the sales performance of a product vary dramatically across instore and online, across website, social and marketplaces. Prominence of place and merchandising in a store, search optimisation online and selling history and customer ratings on marketplaces all affect the turn rate of an item.
For the above reasons, although this is not an exhaustive list, understanding the sales performance of an item across each channel is critical to effective demand planning and purchasing.
Effective multichannel reporting and insight tools will enable you to compare the performance of winners across each channel, identify fast moving stock and your most profitable lines.
Identifying winning suppliers
Certain items may perform well on one channel and not others. Multichannel software can help you identify your winning suppliers on each channel.
With this information on your most profitable suppliers per channel, you can look to expand into other product ranges from that supplier, and maximise sales on a per channel basis.
Investing in stock proportionally to channel performance is a critical success factor in effective demand planning and purchasing.
Identify winning bundles
The right multichannel software will help you understand which items are most commonly purchased together, on each channel. This can be an effective tool when determining which stock to reinvest in.
Basket analysis reports will highlight your stock winners and break out the most commonly purchased items in those baskets.
Using this information, you can ensure your demand planning and purchasing reflects the buying habits of your customers and work towards increasing the average transaction value of your sales.
Taking this one step further, you can use this data to optimise web pages to show the most bought complementary items, increasing the average transaction value and the average number of items in a basket.
Customer Insight
Segmenting your customers in real-time, based upon behaviour and purchase history can provide you with meaningful insights that enable personalisation of your marketing.
With data on your best sellers and the most commonly bought items in bundles, you can personalise your marketing to promote complementary items based on purchase history.
Identifying customers by average sale value and frequency of visit can help you further personalise your cross-selling and upselling promotions.
If you understand your customers and your stock, you are well placed to maximise sales while generating active loyal customer relationships.
Next Steps to determine stock to reinvest in
There are many fine multichannel software vendors operating in the UK, however, the range of functionality varies greatly between products. It is critical to find software that reflects your business model if you wish to optimise the processes of demand planning and purchasing across the multichannel. Customers vary their buying behaviour between channels, instore and online, and to maximise profits, it is not the big picture, but the detail found in each channel that provides the evidence you need to effectively manage demand planning and purchasing. Learn more about multichannel software for retailers selling instore and online here.
About Iain Coplans
Iain Coplans is the founder and Managing Director of Stok.ly, a company which delivers seamless order and warehouse management solutions for retailers selling instore and online.
Stok.ly supports businesses of all sizes, from those looking to grow online through the adoption of new channels through to sophisticated multi-location eCommerce enterprises considering optimising processes to achieve more.
