The current economic climate is cause for concern to retailers. However, some companies are well prepared to weather the storm and are taking advantage of the challenging climate to improve their business and margins through tightening supply chain processes, says Mark Croxton, Managing Director of Aldata Solution UK.
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2008 is the most challenging period for retailers since the 1991 recession, many have trimmed offerings, slashed inventory, shut stores and sliced payroll. Despite this, some companies are taking advantage of the High Street slowdown and are working hard to improve their supply chain performance. This will allow them to maintain their margins today, while positioning their business for growth, profitability and strength for the future.
Leading retailers are taking advantage of the current environment to assess their operational health. By adopting this process many are realising that their disjointed supply chain and merchandising infrastructure is no longer a viable, long-term option.
As a result organisations are moving away from outdated and disparate legacy applications into a single, integrated retail supply chain backbone. This delivers an integrated application suite that can work across all stores and operations to provide the visibility and responsiveness necessary to respond to change now and in the future.
For retailers looking to grow their national and international reach, a single integrated retail supply chain platform enables them to scale and ramp up faster than ever before.
On the supply side, a number of leading retailers are taking advantage of the current market conditions to implement technologies that will allow them to understand their customers at a deeper level. This will allow them to better manage fluctuations in demand and to cost-effectively ensure higher product availability.
Out-of-stocks are one of the biggest problems facing retailers today. At the same time excess inventory can lead to costly markdowns, storage issues, obsolescence, product expiration, inflated shrinkage and spoilage of perishable items. For companies to improve product availability while minimising inventory investments it requires a better real-time view of accurate demand. A number of leading retailers are shifting to an integrated supply chain management backbone and store execution system. Such a framework can support every aspect of planning, allocation and replenishment operations while minimising technology overhead.
During an economic downturn retailers can choose to drive prices down further to maintain market share. Businesses can also increase service levels and introduce new sales channels to retain or increase their share of customer spend. All strategies affect margins through lower unit revenues or increased costs.
When lower pricing is the strategy of choice, increased productivity of store staff via automation is essential. Accurate shelf management, intelligent replenishment, and optimised assortment planning can make the difference as margins get squeezed.
But even during an economic downturn, retailers can no longer afford to compete on price alone. In a world of unprecedented consumer choice, forward thinking retailers are focusing on customer services in an effort to differentiate themselves from competitors who are targeting the same customers with the same products.
For these companies, the secret lies in providing quality service through friendly and knowledgeable store assistants who are equipped with the most up-to-date product information and, potentially, customer loyalty data during the buying process.
Mobile technology is key to keeping sales assistants on the floor where sales and customer loyalty are won or lost. Empowering staff with handheld mobility tools enables them to access better information in order to personalise the customer shopping experience. This yields increased productivity, better service and more cross- and up-sell opportunities.
Innovative and strategic promotions are not enough to drive sustained business improvement during a recession; retailers must also be able to execute effectively on these pricing strategies. Effective execution includes communicating price changes to stores, changing POS pricing information, providing all stores with correctly priced shelf labels.
Organisations must have systems and processes in place that enable it to perform pricing execution tasks efficiently. When these activities have to be performed manually or through several disparate systems they can overwhelm sales floor staff and lead to increased labour costs, pricing mistakes and poor customer service. These factors can negate many of the benefits of a solid pricing strategy.
Retailers can take advantage of challenging economic conditions by improving their ability to respond to change. By executing a balanced strategy, retailers can emerge out of the current and any future down cycles with increased margins, greater customer loyalty, stronger financials and improved stakeholder value. To execute such a strategy, retailers must begin to move away from outdated and disparate legacy applications towards a single, integrated retail supply chain platform.
The full Retail Business Brief Survival of the Fittest How Leading Retailers Are Positioning Themselves for Profitability and Strength in a Tough Economy is now available.
To read the full Retail Business Brief click here: