Retail Inventory Disruption

The retail marketplace disruption is driving the disruption in retail inventory management requirements to support the new marketplace.  My concern is that retailers have focused on the disruption to the retail store and reduction in traffic to the detriment of the inventory management changes necessary to support the retail marketplace.  Retailers should be reviewing their retail business processes to identify changes required of the inventory management process as a means to address the marketplace disruption.  Retailers only focused on the impact to brick and mortar store real estate are missing a potential root cause of the disruption itself which is the change in consumer shopping and purchasing practices. This change in consumer shopping and purchasing impacts the retailers in many ways and the retailer must understand how to address the changes in the most cost effective manner and not simply by divesting real estate holdings.

The large national retailers  are focused on the impact of reduced store traffic while the sales have transferred to eCommerce purchases.  This attitude is only natural and the result seems to be a focus on reductions in the retail store real estate holdings when in reality these retailers cannot afford to simply focus on cost reductions and divesting store real estate.  These retailers must recognize the resulting impact on the inventory support requirements and determine how to react to these changes to the inventory demand requirements first.  In my opinion the definition of the new inventory strategy should be completed prior to determining next steps in the store real estate requirements.

Where this change to the inventory strategy will truly impact the retailer and the future requirements of store real estate is defining how the inventory strategy will address the changes in consumer shopping and purchasing.  In my opinion the retail inventory strategy will, and should, drive the real estate decision.  I see the inventory strategy as a key starting point for defining how retailers will increase their flexibility to support the changing consumer shopping and purchasing demands.  The retail inventory disruption should drive a simplification and standardization of inventory management practices across all channels and then determine how to ensure that inventory is distributed throughout the retail network to most efficiently support the consumer shopping and purchasing demands.  

The retail strategy is the key to the large retailer strategy to meet the disruption in the consumer sales and purchasing practices. Retailers must take the long view in the market disruption and to me this means addressing the disruption through an inventory strategy that views store real estate as a distinct market advantage to allow retailers to move inventory closer to the consumer.  

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?