If it’s not in, it’s not on

Perhaps to play the devil’s advocate: whilst we all rightfully concern ourselves about omnichannel retailing, it is never a reason for us to not keep a radar eye on the ‘basics’ of retailing.

I was reminded on a shopping trip last weekend as to why retailers need to pay particular attention to a critical “operational basic”.

Now I would call myself a “stock standard size”. To sell me a shirt, you don’t have to cut one in half for me or sew two together. But to make a sale, you do have to give me the shirt I want. In my size.

Here I was in the store, a committed buyer, yet the standard size in the shirts I liked were not available for me to purchase so there was no sale.

Candidly, no amount of omnichannel investment will ease the dilemma of missing sales when not being operationally “fit For business’.

If it’s not in, it’s not on. And with an average of 15 per cent of customer sales being unfulfilled due to items being “out of stock”, the ability to link sales with your stock levels is absolutely necessary to unlock your store profits and get ‘fit’ for business.

I would like to be able to say this was a one off experience. But, spurred on to understand the size of the issue (pardon the pun), I visited numerous fashion retailers and a minority had the ability to meet my standard size demands – the rest were out of stock.

Particularly concerning was the fact that much of the product range were new season lines. If you haven’t got it, you can’t sell it.

Note to budding retail consultants: simply testing the stock range in store will tell you immediately if the business is “healthy” in this area and if not will lead you to the infrastructure of supply channel, business information systems, inventory ordering, reconciliation and planning.

Let’s explode a typical myth that describes customer traffic flows as “unpredictable” and therefore hard to plan inventory levels for.

As experienced retailers, we understand there could be +/- 10 per cent variations due to marketing activities, but these are events you can cater for by managing your inventory in tune with your sales forecasting tools. It’s no coincidence that the “fittest” retailers are those who not only take command of a good stock management system, but also excel in buying.

 Forecasting and buying inventory requires a blend of analytics, strong boundaries and vision and a truly “fit” retail marketing leader is disciplined in measuring sales, margin and stock position in both detail and composition. On the opposite side, ‘unfit’ businesses often buy with their opinion, taste and relationship skills as their only buying tools.

An Australian Retail Consumer Research we performed which studied the retail behaviours of more than 1300 Australian consumers, proved there are certain personalities – together making up almost a quarter of the Australian population – who will walk away in an “out of stock” situation. If these consumer types are identified as those who move towards your brand – you could be losing out.

Anastasia Lloyd-Wallis, head of our consumer insights and strategic branding division, explains why: “We know there are three specific personality types who will not respond well at all to out of stock situations: the Hedonists (12 per cent of the Australian population) and the Adventurers (five per cent of the Australian population) are both into instant gratification. If an item is not in-stock, they won’t return and will seek to purchase it elsewhere.

“The Performers (five per cent of the population) are time poor and very time efficient shoppers who also are not prepared to wait. All three personality types will use their mobile phones or the internet to find the nearest and fastest replacement retailer.

“If you haven’t linked your sales to your inventory planning – you’re at a major disadvantage if your store caters to these personality types,” Lloyd-Wallis explains.

To be a ‘fit’ retailer, always make sure your retail business understands the stock to sale ratio and that your inventory planning practices are matched to your order cycles. We insist on this operational procedure – because if it’s not in, it’s not on and you’re not making sales. But your competitors are.