In retail, speed is a strategic advantage.
As well as having the right inventory on hand at the right time.
Much depends, of course, on having the goods physically fit, lining the shelves inside the warehouse and ready to connect the shelves (virtual, brick and mortar) to attract customers.
Consumers, of course, have a range of options online, and when they click the buy button – if the merchant doesn’t have what the customer wants or can’t get it in the required time frame, it’s easy to go straight to the next site.
Amidst the current surplus inventory and the uncertain macro environment, there is certainly less room to move around. As PYMNTS noted on Wednesday (October 6), larger companies were taking up storage space, which in turn meant there was less space for smaller players. The simple economy of scarcity means that the available space ends up becoming more expensive and shrinking profit margins.
A few levers to pull
There are a few levers to getting past just paying more money to chase less space. Juggernauts like Amazon, for example, are able through a platform approach to expand their seller-facing initiatives Providing fulfillment services That take stock on board and ship it. By having what is arguably a first/early mover advantage (Amazon, of course, has more than 374 million square feet of inventory space on hand), providing a lifeline for smaller sellers that includes warehousing and shipping can prove invaluable (And the platform is sticky, too.)
The pressures are not limited to SMEs, to be sure, they are leading to innovations and a “do-it-yourself” approach that can improve inventory management and profit margins. In one case, as noted in this space, Macy’s used credit card data and other analytics to break out of looming inventory pressures, having cut orders as consumers shifted their spending to sectors other than apparel and household goods.
Read also: Macy’s Outmaneuvers Bigger Rivals on Inventory Control
Elsewhere, companies like Target are looking to fill the bulk of in-store orders—Target does this for 96% of their sales—and thus have a more efficient use of their existing physical footprint. Advanced technologies, including robotics, are increasingly being added to the mix.
Walmart said today only (October 6) that it will acquire Alert Innovation, a bot automation company that develops automated technology for Walmart’s market fulfillment centers using bot technology to help store, retrieve and distribute orders. Earlier this year, Walmart said it would expand its partnership with automation technology company Symbotic. Walmart will use Symbotic’s robotics and artificial intelligence (AI) software for all of the retailer’s 42 regional distribution centers.
As the old saying goes about real estate – and thus warehouse space – the supply is not infinite. So it will be up to retailers, large and small, to make better use of the inventory management tools they have at their disposal.
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