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As consumers’ shopping demands shift and market trends evolve, retailers must scale their omnichannel operations to meet these needs. One key strategy is ensuring inventory management remains a top priority. Effective inventory management provides retailers with valuable customer data and helps mitigate supply chain challenges in a global marketplace.

Mark Engebretson, Global Operations Lead at Faherty Brand, shared several takeaways related to this from his 40-year-plus retail career during an Endless Aisle podcast conversation with Marcus LaRobardiere, NewStore’s Vice President of Marketing. Mark and Marcus discussed why inventory management is important for omnichannel success and how approaching retail with a solution-first mindset yields better results than chasing trends.

Read on for more key insights from Marcus and Mark’s discussion, and click here to listen to the full podcast episode.

Inventory Management’s Pivotal Role in Retail Success

Mark emphasized that retailers should prioritize inventory management and omnichannel capabilities. This allows them to meet consumers wherever – and however – they prefer to shop.

“Your inventory is probably your greatest asset outside of your people,” Mark said. “Managing inventories [is] going to be critical. An omni world is also critical, and folks that aren’t in that yet are going to struggle.

“You have to be lean in your purchasing – and smart. You have to be reactive. And you have to enable tools that will move product where you need it to be, as quickly and as efficiently as possible.”

Better inventory management leads to more inventory visibility. This refers to retailers’ ability to track and manage products’ movement through the supply chain – all in real time. Inventory visibility also gives retailers more accurate data on sales, inventory stock levels, and consumer demand for products.

As a result, brands can make more informed decisions about products they want to stock and better forecast demand for certain items. Additionally, they can mitigate potential challenges around buying too much or too little stock from manufacturers.

Avoiding Supply Chain Challenges

Developing a strong supply chain should be of utmost concern to retailers, especially since omnichannel fulfillment helps them reach customers worldwide. According to PricewaterhouseCoopers’ 2023 Digital Trends in Supply Chain Survey, many executives are prioritizing near-term supply chain priorities instead of focusing on actions that can yield long-term value. Additionally, only about 33% of executives claim that increasing resilience remains a top priority as they invest in supply chain technology.

“The supply chain itself, as you think of it from end to end, is doing a lot of expanding and contracting,” Mark said. “The problem is the pieces that make up that supply chain – whether it be inbound, raw materials, factory manufacturing, shipping warehouse operations, allocations, shipping, and third mile – all of those are expanding and contracting at different rates.

“So what you constantly have is stuff banging up against each other. And it’s one of the reasons that people are sitting with a ton of inventory – that expansion and contraction happened at different paces. All of that multiple expansion and contraction [is] going to take a while to finally settle down.”

One way in which retailers can increase visibility into their supply chain is by investing in the right inventory management technology. This will enable them to keep track of serialized inventory, simplify product transfers, and seamlessly receive new items – therefore giving staff more time to spend with customers.

Focusing on Solutions Versus Trends

Mark also noted that brands should focus on chasing solutions rather than trends. Retailers should not assume a one-size-fits-all approach for the technologies they choose to integrate into their systems. Instead, they should prioritize the business’s needs when searching for the best technology vendor.

“I’m not trend driven,” Mark said. “I’m problem-solution driven. In terms of our business, I try to run a race backwards. I always go to the finish line first and then run it backwards and figure out what I need to do to get to the finish line.

“So I’m constantly trying to see what we need next and then how we want to solve it. If it turns out that the new technology that’s out there solves it, great. But particularly right now, we need to be focused on our needs and not distracted by the new shiny toy.”

How Inventory Management Drives Better Omnichannel Strategies

Brands seeking to make a bigger impact within today’s competitive retail marketplace must prioritize developing robust omnichannel strategies. Inventory management plays a critical role in driving omnichannel success, as it enables retailers to evaluate and optimize their current systems and processes.

It also helps retailers bridge the gap between their digital and physical shopping experiences. They can leverage inventory visibility to offer real-time product availability across channels, let customers engage in mixed cart transactions, and allow shoppers to use a variety of fulfillment methods, like buy online pick-up in store (BOPIS).

Ultimately, maintaining real-time views into inventory and related data results in better experiences for retail staff and consumers. If brands invest in the right technology to power their inventory management needs, their chances at omnichannel success will significantly rise.

To learn more about how your business can maximize its inventory management capabilities, speak with one of our experts today.

The post Faherty Brand on Why Inventory Management is Key to Omnichannel Success appeared first on NewStore.

• What Is BOPIS?
• How Does BOPIS Work?
• What Are the Benefits of BOPIS?
• What Are the Possible Challenges Associated With BOPIS?

What Is BOPIS? 

The meaning of BOPIS is “buy online pickup in-store.” It is also sometimes also referred to as “click-and-collect.” BOPIS is a fulfillment method used by retail brands. It allows shoppers to buy products online and pick up their purchases in-store, usually in a matter of a couple of hours. 

BOPIS gives shoppers the convenience of online shopping with the lower costs and immediacy of the in-store experience. It also brings consumers back into stores where they’re more likely to browse and make additional purchases.

Many retail stores, including large retailers like The Home Depot, Kohl’s, Academy, and Walmart, were already using BOPIS before the pandemic to streamline the customer experience. But many shoppers tried it for the first time as a result of the changes in store operating policies. Today, many shoppers expect your store to offer BOPIS, which includes variations, such as: 

• Curbside pickup
• Buy online return in-store (BORIS)
• Reserve online pay in-store (ROPIS)

Some retail brands offer “buy online ship-to-store” (BOSS). While a popular option, it doesn’t have the immediacy of BOPIS as the order is shipped from a warehouse instead of being fulfilled from store inventory. This can take days instead of hours, which doesn’t quite align with the on-demand economy that we’re living in. 

How Does BOPIS Work? 

It’s important to stay relevant by offering BOPIS to your customers. In retail, BOPIS happens in three steps: ordering, processing, and collecting.

1. The customer places an order online

The customer shops for products either through your website or mobile app. As with any other online order, next they add products to their cart. However, when it’s time to check out, the shopper chooses “pick up in-store,” “store pickup,” or another similar variation, instead of delivery. 

This is why it’s so important to have a flexible order management system (OMS) and accurate inventory. You cannot properly execute BOPIS without a real-time view of stock levels. The risk is not being able to fulfill orders and giving customers a poor experience, which can turn them away for good.

Ideally, your system should give shoppers available pickup timeframes and locations before they check out, so customers can choose the best options for them. After making their selection, the customer pays online and submits the order. 

2. The store fulfills the order

Next, the OMS routes the customer’s order details to the desired pickup location. It includes details on the products, quantities, and pickup time for your store associates to begin picking and packing the order. 

Ideally, products will be in stock and employees are able to simply prepare the order. However, sometimes you may have to transfer products between retail locations or wait for a shipment to come in. In this case, your customer will know about the delay ahead of time. 

When the products are ready for pickup, your associates notify the customer through text, email, or app notifications. 

3. The customer picks up their order

Once the customer receives an alert that their order is ready, they’ll go to your retail location to pick it up. 

The customer might make their way to a designated “online pickup” area in your store. For some brands, that is simply a separate counter or kiosk. For others, it looks like lockers or something similar. Ideally, however, your store associates will have a mobile point of sale system that makes it easy to complete the order handover from anywhere in the store. Or even better, if you have a shopping app, customers can pick up orders in-store with one tap.

With a location-based activated store mode, picking up an order in-store has never been easier with a shopping app. The customer can just walk into the store, open the app, and the pick-up order will pop up. 

What Are the Benefits of BOPIS?

Buy Online, Pick Up In-Store (BOPIS) offers several benefits to both retail brands and consumers. Here are some of the advantages:

Elevated customer experience

BOPIS provides a seamless and flexible shopping experience. Customers have the convenience of online shopping and the immediate satisfaction of picking up their purchases without the wait.

Reduced shipping costs

For brands, BOPIS can help reduce shipping costs as the customer is responsible for transportation from the store. This can be particularly significant for bulky or heavy items that would incur higher shipping expenses.

Increased foot traffic

BOPIS can drive more customers to physical stores, increasing foot traffic and potentially leading to additional in-store purchases.

When customers come into the store to pick up their orders, brands have the chance to upsell or cross-sell additional products. This can contribute to increased sales and customer satisfaction.

Reduced returns

Since customers have the opportunity to inspect their purchases at the time of pick-up, there may be fewer instances of returns due to dissatisfaction with the product.

Environmental impact

With BOPIS, customers may choose to consolidate multiple purchases into a single trip, reducing the number of individual deliveries and the associated carbon footprint. Fewer returns also reduces environmental impact.

What Are the Possible Challenges Associated With BOPIS?

While BOPIS offers significant benefits, there are also challenges associated with its implementation. Here are some common challenges:

Requires a brick-and-mortar store

To allow customers to buy online, pick up in-store, your brand obviously must have both an online and physical store. If you lack one or the other this approach becomes impossible.

Inventory accuracy is crucial 

Keeping an accurate and up-to-date inventory is vital for BOPIS. If the online inventory doesn’t reflect the actual stock in the store, it can lead to customer dissatisfaction when items are not available for pickup as expected.

Store associates will need training 

Employees will need proper training to handle BOPIS orders effectively. They must understand the process, locate items quickly, and communicate effectively with customers.

Necessitates space

BOPIS requires designated spaces for order storage and customer pickup. If your store has limited space, it may be challenging to allocate specific areas for these purposes without disrupting the regular shopping experience and driving up wait times.

You need omnichannel order management

Legacy systems won’t get the job done. Retail brands need to integrate their online and in-store systems seamlessly. An omnichannel order management (OMS) system allows your brand to seamlessly manage and fulfill customer orders across various sales channels. 

Give Shoppers The Flexibility They Crave

BOPIS is a testament to the benefits of using an omnichannel approach. One that combines the ease of online shopping with the efficiency of in-store shopping.

Having the right technology to support solutions like BOPIS, is important. NewStore’s omnichannel OMS modernizes fulfillment to maximize store productivity and get products to customers faster. Sign up for a demo and harness the power of omnichannel.

The post What Is BOPIS (Buy Online Pickup In-Store)? appeared first on NewStore.

Inventory accuracy is one the biggest challenges for retail brands today.

Many brands are having trouble getting it right because most inventory management systems haven’t evolved for modern retail. But it’s imperative to develop a system to properly manage it. Poor inventory management not only negatively impacts revenue but also your customers’ experience.

This article highlights how to calculate inventory accuracy, the benefits of making inventory accuracy a priority, and steps you can take to improve inventory accuracy so that your retail brand can operate efficiently and meet customer expectations.

Table of Contents:

• What Is Inventory Accuracy?
• Importance of Inventory Accuracy
• How to Calculate Inventory Accuracy
• Additional Benefits of Inventory Accuracy
• How to Improve Inventory Accuracy

What Is Inventory Accuracy?

Inventory accuracy measures the disparity or inconsistency between physical and recorded inventory and is an integral part of inventory management.

Your customers expect your products to be available if you say they are. If you can’t connect your customers to what they want, when they want it, you risk losing their loyalty and repeat business. On the other hand, poor inventory management can result in wasted resources. You don’t want to have more product in stock than is likely to sell through.

To drive customer service and improve your bottom line, you’ll want to achieve inventory accuracy.

Importance of Inventory Accuracy

Inventory accuracy is crucial for ensuring customer satisfaction by enabling timely and error-free order fulfillment, which directly impacts the customer experience. It plays a pivotal role in cost control and operational efficiency, preventing overstock and stockouts, optimizing inventory levels, and streamlining warehouse operations. Additionally, accurate inventory data supports financial accuracy, allows for data-driven decision-making, and helps prevent losses.

Customer satisfaction and order fulfillment

Accurate inventory ensures that customer orders can be fulfilled promptly and accurately, meeting customer expectations and enhancing satisfaction. It also reduces the likelihood of errors in picking, packing, and shipping, contributing to a positive customer experience. Timely order fulfillment contributes to customer loyalty, fostering long-term relationships and positive reviews.

Operational efficiency and costs

With accurate inventory data retail brands can prevent overstocking and stockouts. It also allows brands to optimize warehousing and handling costs by aligning storage needs with actual demand. This streamlined approach improves overall operational efficiency, reducing excess expenditures associated with surplus inventory and inefficient logistics.

Forecasting 

Accurate inventory information provides a foundation for data-driven decision-making, supporting strategic choices related to purchasing, production, and sales strategies.

Loss prevention

Accurate inventory tracking helps identify discrepancies caused by theft, damage, or other forms of shrinkage, aiding in the prevention of losses. Early detection of these issues allows businesses to implement security measures and safeguards, reducing financial losses and maintaining the integrity of the supply chain.

How to Calculate Inventory Accuracy

To calculate inventory accuracy, you need to first get an accurate count of what you have in stock. Next, you can do inventory reconciliation and compare the physical inventory count with the record of inventory on hand.

If your retail brand has many SKUs, a high quantity of items, and inventory in many locations, you’ll likely want to use a sample to calculate inventory accuracy.

Inventory accuracy is shown as a percentage. You’ll divide the number of counted items that are completely accurate by the total number of inventory items counted, and then multiply this number by 100. Inventory is considered correct when both the quantity and location match what’s on record.

A good inventory accuracy rate is 97% or higher, but of course 100% is ideal.

Additional Benefits of Inventory Accuracy 

As we’ve discussed, achieving inventory accuracy is vital for success. Making inventory accuracy a priority will greatly benefit your brand. We highlight these key benefits below.

1. Elevated store experience

The store of the future will be all about the experience. With accurate inventory, you can reduce friction during processes like returns and exchanges, while increasing the store’s overall utility.

Gone are the days of massive stores stocked with goods from wall to wall. How? Well, by making your inventory available to sell across your network of stores, warehouses, and distribution centers. Now, you can have smaller stores with less inventory and more experiential draws, such as in-store workshops, lounge areas, or influencer meet and greets.

At the end of the day, you want to create as many opportunities for positive engagement as possible between your store associates and customers, and your customers and brand. 

2. Improved event response time

Real-time inventory data allows for an immediate response to dynamic events in your supply chain such as a sudden increase in demand in one location. Having an accurate picture of inventory means you can quickly transfer items to satisfy the demand. Your frontline team can shore up the sale instead of turning away customers.

3. Greater planning ability 

Inventory visibility is also strategic for proper forecasting and planning. It’s imperative you have a keen understanding of what is really happening to your inventory over a specific period of time. This will allow you to carefully calculate the inventory needed to fulfill future orders, while also zooming in on customer buying behaviors, trends, and patterns. 

4. Boosted resource efficiency

With the real-time synchronization of all inventory data, manual tasks like cycle counting and receiving become a fully automated, even ongoing process. Additionally, for your fulfillment associates, it prevents mispicks and reduces the chance of shortages. These efforts all become even more efficient from a mobile device. 

5. Enhanced employee empowerment

Less cumbersome processes mean more time for personalized service. Your associates will be back on the store floor instead of checking the stock room or calling another store for an item check. Being shoulder to shoulder ensures your employees build unique and profitable relationships with every customer.

6. Increased store health

Better inventory visibility = more inventory sell-through = higher GMV. (That’s the North Star metric in retail). One study found 60% of retailers surveyed had inaccurate inventory; however, when corrected their sales jumped 6%. We can believe it––inventory accuracy is the backbone of modern retail.

How to Improve Inventory Accuracy

There’s no denying that achieving inventory accuracy is hard. It takes a well-defined process, training, diligence and the right software. Fortunately, there are steps you can take to improve inventory accuracy. We cover them below.

Omnichannel order management

When a retail IT stack is made up of legacy point solutions––for e-commerce, warehouse management, transportation, etc.––there is no data integrity. The systems don’t communicate and aren’t connected, which quite simply doesn’t allow for a single view of stock.

When you lack real-time inventory data, you’re forced to use safety stock to make your omnichannel solutions work. This means buying and carrying more inventory than you need. But what happens when you overbuy in the wrong place? The product gets marked down and you lose out on the full-price sale. 

An omnichannel order management system connects inventory, customer, and order information in a single, unified platform. It also provides a singular view of enterprise-wide inventory which you can use to determine if a product is available to sell.

If you want to achieve inventory accuracy, your retail brand needs a flexible order management system.

RFID technology 

Another way to tackle inventory management is with radio-frequency identification (RFID) technology. RFID is no longer a sexy option out of your reach; as costs decrease, its adoption is skyrocketing. In 2014, only 34% of North American retailers had implemented RFID. Today, 93% of retailers say they’re either piloting the tech or have fully adopted it into their business.

Why the sudden spike in adoption? The lower barrier of installation is one, but also Accenture found RFID can increase inventory accuracy from 70% to over 95%. If inventory has been an Achilles heel in your quest to omnichannel success, this is a solution worth implementing. It can also help in other business areas, including preventing theft and tracking how product moves about your store. 

Well-labeled items

A general rule of thumb is to avoid handwritten labels on inventory items. This is because they are prone to error and hard to read—thereby resulting in mislabeled goods that are hard to track, negatively impacting inventory accuracy.

The best way to pull off inventory labeling is to use printed labels containing the bar or QR codes of the individual inventory item. Barcodes should integrate with automated systems.

Cycle counting

Cycle counting is an inventory auditing procedure. It uses a sampling technique that allows businesses to count a subset of inventory in a number of areas.

Although brands don’t have to count their entire inventory, it serves a useful purpose by establishing a regular system of checks and balances. Cycle counting, therefore, allows businesses to verify that their physical inventory counts match their inventory records.

Cycle counting helps brands quickly identify problem areas in their inventory. But to improve inventory accuracy, retail brands must ensure they have a comprehensive cycle counting program that’s been integrated into daily operations. 

Inventory storage

Improving inventory accuracy often comes down to having ample space to store inventory items. Brands can lose money due to ineffective storage methods that waste time and increase labor costs. This could also impact customer retention, especially if there’s lost inventory and customer orders aren’t fulfilled on time.

Organizing a warehouse effectively entails categorizing inventory appropriately for easy access. You can also professionally store inventory. Though you’ll incur more overhead costs, professional storage companies have the technology and knowledge necessary for inventory accuracy.

Turning your own stores into fulfillment centers can also help resolve storage issues and improve efficiency.

Approach Inventory Accuracy the Right Way

To satisfy customers, retail brands need to maintain accurate and effective levels of inventory. To achieve this, most will need a trustworthy partner by their side.

As an Omnichannel-as-a-Service platform, NewStore has a track record of successfully handling complex inventory management.

Learn how your brand can take inventory management to the next level.

The post Guide to Inventory Accuracy: How to Calculate and Improve It appeared first on NewStore.

What Is Distributed Order Management?

Distributed order management (DOM) optimizes order processing and fulfillment. It’s an advanced component of an order management system (OMS). With DOM, an OMS can support multiple channels and use routing logic to fulfill customer orders from the ideal location. This helps retail brands minimize costs and reduce shipping times.

Distributed order management supports a retail brand’s omnichannel approach by optimizing their ability to sell, fulfill, and process returns from anywhere. Replacing legacy systems with flexible OMSs that include DOM ensures inventory visibility. This makes it such that you can process orders from multiple channels and offer various fulfillment options to customers.

With a legacy OMS, you won’t be able to ensure that your physical and digital presences are integrated, and therefore, will likely run into operational and fulfillment challenges. And we all know if you fail to offer quick and convenient fulfillment options, you’ll most certainly lose customers to competitors.  

Key Advantages of Distributed Order Management

The ultimate aim of distributed order management is to improve the fulfillment process. With omnichannel retail, there are multiple touchpoints, and you need an order management system that can work across each and every one. A legacy OMS simply won’t cut it. Below, we outline the benefits of distributed order management. 

Enables inventory visibility across channels

Distributed order management provides real-time visibility into your inventory across all channels. This means you have up-to-date and accurate information about stock levels, locations, and product availability.

This visibility allows for efficient order processing, as you can fulfill orders from any channel with confidence, knowing the exact status of the inventory.

Supports inventory management

With DOM a retail business can incorporate advanced forecasting tools, allowing you to predict demand more accurately. This helps in managing inventory levels efficiently to meet both current and future demands.

By analyzing historical data and current trends, inventory management becomes a proactive process, reducing the risk of overstocking or stockouts.

Reduces transit time and shipping costs

Enable intelligent order routing to the nearest fulfillment center or store. This not only reduces transit time but also minimizes shipping costs, enhancing overall operational efficiency and customer satisfaction.

Enables order splitting and merging

Order splitting allows fulfillment from multiple locations, optimizing the shipping process and reducing costs. Merging orders, on the other hand, ensures efficient handling of items that can be shipped together, further minimizing expenses.

Allows for endless aisle

By leveraging inventory visibility, retailers can implement an endless aisle strategy. This ensures that even if a product is not physically present in-store, customers can still purchase it, enhancing customer satisfaction and preventing lost sales.

Affords customers different fulfillment options

DOM facilitates diverse fulfillment options, such as “buy online pickup in-store” (BOPIS) or ship-from-store. This flexibility caters to various customer preferences, providing a seamless and convenient shopping experience.

Boosts ability to adapt

Retail brands can swiftly adapt to changes in orders, shifts in demand, or disruptions in supplier availability with distributed order management. This agility ensures that your business can respond promptly to market dynamics, maintaining customer satisfaction.

Reduces data silos

Eliminate data silos by providing a centralized platform for comprehensive visibility across all channels. This integration enhances data accuracy, streamlines operations, and eliminates inefficiencies caused by fragmented information.

How Do Distributed Order Management (DOM) Systems Work?

DOM systems function to address the fundamental principle that orders should be fulfilled from the most strategically optimized location. This approach provides the agility to navigate changes or challenges associated with orders, fluctuating demand, and the availability of suppliers, while ensuring the product gets to the customer as quickly and seamlessly as possible.

A DOM system acts as a central hub, receiving and processing orders from all channels, while providing real-time visibility into inventory levels across the entire supply chain. This includes various storage facilities, warehouses, and retail locations.

Using intelligent algorithms and predefined business rules, the DOM system determines the most optimized location to fulfill each order. Factors considered may include proximity to the customer, inventory availability, and cost-effectiveness. The system may split orders to fulfill them from multiple locations efficiently, minimizing shipping costs. Conversely, it may merge orders when items can be shipped together to optimize the fulfillment process.

DOM also enables retailers to offer diverse fulfillment options such as “buy online pickup in-store” (BOPIS), ship-from-store, or other methods based on customer preferences. 

Disturbed order management example

Imagine a customer places an order through her favorite shoe retailer’s website for two pairs of shoes. The dressy pair, which she wants to wear to an event tomorrow, is available at a nearby retail store, and the limited edition pair is at several warehouses scattered across the country. 

The Distributed Order Management (DOM) system seamlessly processes the customer’s order, intelligently splitting the order to optimize fulfillment speed. The system alerts the store that there is an order for in-store pickup, while simultaneously identifying which warehouse to ship the other pair from so it reaches the customer as efficiently as possible. 

Why Omnichannel Retail Brands Need Distributed Order Management

If you’re a brand that has multiple warehouses, a large number of SKUs, several storefronts, or a growing number of suppliers, then when evaluating order management systems, you’ll certainly want to look for one that has distributed order management capabilities.

When choosing a solution, make sure you also consider your brand’s specific needs. For example, if you want to be able to enable stock pickup, you’ll want a solution that has configurable safety stock and threshold rules to prevent in-store stock-outs.

Retail brands need to be able to connect the channels they sell across and have accurate, real-time visibility into inventory and orders. You also need to be able to deliver a great customer experience, one that includes multiple options for fulfillment.

Ideally, distributed order management capabilities will reduce operational pain points by prioritizing data connectivity and automation and make it easy to meet customers’ growing expectations. Afterall, getting customers what they want, when they want, and how they want it is the name of the game.

Omnichannel Order Management Is Simple With NewStore

Distributed order management plays a crucial role in managing inventory and fulfillment. By reducing shipping time and costs, you can increase customer satisfaction and elevate your business above less forward-looking competitors.

Replacing your legacy OMS with an omnichannel one that includes distributed order management is key for any brand looking to succeed in the modern world of retail. Learn more about NewStore’s Order Management.

The post What Is Distributed Order Management (DOM)? appeared first on NewStore.

• What is Clienteling?
• Clienteling vs. Customer Service
• How Does Clienteling Work?
• Benefits of Clienteling for Retailers and Customers
• 5 Pillars of Clienteling in Retail

What is Clienteling

Clienteling is a modern customer service technique that allows brands to build long-lasting relationships with customers, offer personalized and one-to-one shopping experiences, find cross-selling and upselling opportunities, and empower employees with actionable information. Essentially, it’s a delicate dance between commerce, content, and communication.

Clienteling vs. Customer Service

While customer service is a broader term that focuses on addressing customer inquiries and issues, clienteling is a more strategic and personalized approach that aims to build and maintain long-term relationships by understanding and meeting individual customer needs. Clienteling often involves using customer data and technology to enhance the shopping experience and provide targeted, personalized services.

How Does Clienteling Work?

In the current retail environment, clienteling is executed by using a combination of genuine human interaction and technology. Often it’s a component of or integrated with a point of sale (POS) system that’s available on a mobile device – removing the random nature of selling and making it easy for associates to support shoppers anywhere on the store floor.

Everything clienteling encompasses is what customers expect. It also guides their decision-making. According to the consulting firm BRP, three-fourths of shoppers say personalized service is a significant factor in helping them decide where to shop. With clienteling, you can be proactive with the customer versus reactive – validating your shopper’s choice to spend with you over your competitors.

Here’s an example of clienteling in action:

Imagine a customer who frequently visits a cosmetics store. Upon entry, a store associate would access the customer’s profile, which includes information about their preferred brands, past purchases, and any specific skin concerns mentioned during previous visits.

Additionally, the associate is aware that the customer has an upcoming special event, such as a wedding, based on the information shared during previous interactions. Armed with this knowledge, the sales team can provide personalized recommendations for skincare products tailored to address the customer’s specific concerns. Clienteling deeply enhances the customer experience, allowing for a proactive and personalized approach.

Benefits of Clienteling for Retailers and Customers

Clienteling not only benefits the shopper but also makes the store associate’s job easier. With clienteling your brand can recreate the magic of early retail and drive topline revenue.

1. Improves customer engagement and loyalty

By understanding individual customer preferences, purchase history, and needs, retailers can engage customers on a more personal level.

Retailers can use clienteling tools to maintain consistent and targeted communication with customers. This may include personalized emails, SMS messages, or app notifications, keeping customers informed about relevant products, promotions, and events.

When retailers consistently provide personalized and attentive service, customers are more likely to remain loyal to the brand, resulting in repeat business and increased customer lifetime value.

2. Increases revenue

Personalized recommendations, targeted promotions based on customer data, and increased customer lifetime value, can lead to higher conversion rates. When customers feel that a retailer understands and caters to their preferences, they are more likely to make additional purchases.

3. Optimizes inventory management

Retailers can use clienteling data to anticipate customer demand and preferences, allowing for more accurate inventory forecasting. This helps in stocking the right products at the right time, minimizing overstock and stockouts.

4. Creates cross-selling and upselling opportunities

By analyzing customer data, retailers can identify opportunities for cross-selling and upselling. Recommending complementary products or higher-value items based on a customer’s preferences can increase the average transaction value.

5. Enhances the in-store experience

When clienteling involves the use of technology, such as a POS mobile device, to provide real-time access to customer information, sales associates can use this information to offer personalized assistance, making the in-store experience more engaging for customers.

6. Boosts adaptability to changing market trends

Clienteling allows retailers to adapt to changing market trends and customer behaviors quickly. By staying informed about customer preferences and market dynamics, retailers can adjust their strategies to remain relevant.

5 Pillars of Clienteling in Retail

Clienteling in retail is built upon several key pillars. These components encompass customer engagement, data utilization, and personalized services.  Below are five pillars of retail clienteling that you should make part of your approach.

1. Personalized customer profiles

Shoppers don’t want to be just a transaction. If they are, they are likely to be a one-and-done visitor. Enter robust customer profiles, which help paint a picture of your shopper as an individual. It’s more than just contact information. An insightful customer profile features personal information, notes, customer-specific KPIs and a “look” into the person’s closet.

Store associates at Tiffany & Co. do a good job of capturing customer information to augment their clienteling efforts. They take notes about personal events like birthdays, anniversaries and weddings. As a result, it is easier for them to sell to their shoppers for life’s most intimate celebrations. 

2. Rich product information 

Shoppers expect associates to have instant access to price and inventory information. It’s why having rich product data is critical to clienteling – with it you’ll never have to turn a customer away for not knowing an answer or not having what they want.

Take endless aisle. Selling stock from any enterprise location opens up the potential for a double-digit lift in sales. It’s more than that, though; when associates are selling, they’re building a relationship based on trust and reliability. This has become increasingly important to shoppers who want to shop brands not only for their product but also for how they are treated. 

3. Customer data

The shopping journey is far from linear. It often starts with online browsing, only for the customer to make a purchase in person. Or, the customer goes in-store to try on an item, then hits buy from their couch at home. All these touchpoints make it necessary to have a 360-degree view of shopper activity, from past purchase history to item wishlists.

Whether online or in-store, each engagement or transaction is an opportunity to collect data and enrich the customer profile. When a store associate uses a mobile device in this scenario, customer data collection rates may increase by up to 300%. This allows the employee to service the customer better at the moment, and the next time they interact with the brand.

4. Tailored promotions

There’s nothing worse than receiving a promotional email for a product you own. However, you can avoid this entirely by using clienteling data to market on a one-to-one level. Notify a customer when a new variation of their favorite shirt is available. Address your client by their preferred name, not the name on their credit card. Invite them to an upcoming event because you know they like yoga. The act of selling becomes a much stronger, trust-based service.

In a Re-tales interview with Kaitlin Gottlieb, Director of Retail Sales and Clienteling at UNTUCKit, she says clienteling isn’t about sale notifications or back-in-stock alerts. It’s about using customer and product information to identify outfit building opportunities or suggest new arrivals based on what a customer already owns. Therefore, clienteling is the many ways in which you can jump off the relationship you’ve already very carefully nurtured.

5. Unparalleled customer service

Like buying, clienteling doesn’t just happen in-store. It’s important to extend customer information beyond the four walls and make it actionable by everyone from customer support to headquarters. Data is everywhere, so it needs to be carefully collected, analyzed and distributed so all employees can use it to engage customers.

Adidas is one brand that arms its customer support agents with as much detail as possible. Within its exclusive app is a live chat feature, where its on-demand service reps have access to product details, stock levels, and shopper information. They use this information to guide the shopper wherever they are in their path to purchase.

Successful Clienteling Requires the Right Tools

The quality of a shopping experience goes a long way in determining a brand and customer relationship. Clienteling efforts can have a quantifiable impact if sales associates are able to easily access and quickly act on the right information, anytime and anywhere.

When associates engage in clienteling activities, the total number of transactions (online and in-store) can increase by 5%. Even more, customers who are clientelled to have a 4x higher average annual spend. It’s easy to see the undeniable power of being proactive.

With clienteling, you can transform your customer experiences into high-touch and personal relationships that stick.

Learn how to create a personalized shopping experience at your store with NewStore’s clienteling and remote selling solutions.

The post What is Clienteling? A Guide for Retail Brands appeared first on NewStore.

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The rapidly evolving digital landscape has significantly impacted the retail industry, making it easier than ever for retailers to reach potential customers worldwide. However, continuing to foster customer loyalty and enhance shoppers’ in-store experiences remain top priorities for many brands.

That’s where the practice of clienteling comes to life – by incorporating human connection into the essence of retail. Kaitlin Gottlieb, Senior Director of Omnichannel at UNTUCKit, emphasizes clienteling’s critical role in building long-term connections between customers and store associates.

What is Clienteling?

Clienteling helps store associates offer personalized shopping experiences by giving them a full 360-degree profile of the customer. Associates can leverage clienteling to message customers on a mobile app and search for a specific shopper in a database. They can also access shoppers’ purchase histories to recommend products they may like, and note customers’ personal preferences – such as sizes and styles – in their digital profiles.

How Clienteling Empowers Store Associates

During an Endless Aisle podcast interview with Marcus LaRobardiere, NewStore’s Vice President of Marketing, Kaitlin discussed the symbiotic relationship between technology and store associates. While today’s world grows increasingly digital-first, particularly for many shoppers, technology should not replace store associates’ roles in assisting with the customer journey. Instead, technology should augment their roles. Equipping in-store staff with the right technology solutions will provide additional opportunities for personalizing the shopping experience for each individual.

Read below for several key insights from Marcus and Kaitlin’s conversation, and click here to listen to the full podcast episode.

How Clienteling Fosters Better Customer Connections

As retailers consider strategies to boost in-store traffic, leveraging clienteling should be a priority. Clienteling helps bridge the gap between the physical and digital worlds by offering store associates valuable customer data that they may not obtain as easily without the help of technology.

This data then facilitates more personalized in-store interactions with shoppers, which could result in greater brand affinity and more sales. As an example, store associates can leverage data from customer profiles to cross-sell or upsell products that the customer may not have initially considered.

“Clienteling is fostering relationships and all about getting them back,” Kaitlin said. “And so associates [are] able to not only engage with customers that they connect with, continue to text them, but influence and inspire them across all different product categories – perhaps for another family member or friend.”

The Intersection of Human and Tech Collaboration

Although many consumers are no stranger to shopping on digital platforms, human interactions are still paramount to retailers’ success. When store associates gain access to the right technology, they can do their jobs more efficiently. This increases employee engagement and reduces the potential for staff turnover.

“The best technology enhances the store associate’s role and allows them to focus on [being] beneficial in that face-to-face contact,” Kaitlin said.

Additionally, store associates can collect valuable feedback from customers on digital tools that will enhance their shopping journeys. This could include adding a new feature to a mobile app or improving an existing function. This results in continuous optimization to improve the in-store experience.

How Apps Fuel Collaborative Shopping Experiences

Store associates can also leverage retailers’ mobile apps to further collaborate with customers on creating personalized looks. Some brands enable app users to virtually try on items and receive customized product recommendations. 

“I love that the app for associates oftentimes becomes a collaborative tool with the customer,” Kaitlin said. “It’s almost like you can dive into the product in the fitting room and then [say], ‘Let me show you some inspirational ways to wear it.’ 

“Our products often are easy to flip through those product images to really enhance [the shopping experience]. It’s really easy to pull up the app and demonstrate what this looks like on the model wearing the product and bring it to life that way, in addition to all of the amazing visuals that we have in our stores.”

This type of clienteling can increase customers’ average basket size by helping them create new outfits or garner inspiration for gifts for family and friends.

The Need for Personalized Retail Experiences

Per Kaitlin, customer engagement does not encompass a one-size-fits-all approach. She underscores that retailers must offer personalized experiences that resonate with a slew of customer personas.

She cited Sephora as a prime example of a retailer providing personalized in-store experiences to different types of customers. Those who visit a Sephora store can select a shopping basket in one of two varieties: a black basket that indicates their openness to being helped by a store associate or a red basket that signals a preference to be left alone while shopping.

Other retailers may opt to leverage clienteling to follow up with customers via text or mobile app about new inventory they may like or to inform them that their preferred product’s size or style is now available. 

“Not every customer wants to text when they leave the store; it’s not for everyone,” Kaitlin said. “But when you identify, connect, and find that genuine, authentic relationship, it’s natural to want to stay connected.”

How Retailers Can Maximize Clienteling 

Retailers can maximize their efforts to build stronger customer brand affinity via clienteling by embracing a growth mindset and striving for continuous optimization. This extends to technology – such as taking feedback from shoppers about certain app features that would augment their experiences – as well as improving one-to-one human interactions. 

Brands should obtain a clear focus on specific challenges or needs they are trying to address and be willing to innovate – even when it’s risky. And if they experience failure, they can treat it as a learning experience that will fuel faster growth in the future.

Ultimately, retailers can foster more loyalty with consumers by leveraging technology’s massive reach while remaining rooted in key elements of human connections – such as personalized interactions and consistent communication. This type of approach to developing a unique customer journey not only builds brand advocates among individual shoppers, but it may extend to their friends and family as well.

“One customer has a great experience – you’re probably going to tell a lot of your friends and family about that experience,” Kaitlin said.

Interested in learning how your business can use clienteling to enhance the customer journey? Speak with one of our experts today.

The post UNTUCKIT’s Kaitlin Gottlieb on the Importance of Clienteling appeared first on NewStore.

Challenges of AI in Retail

To avoid AI’s potential pitfalls, brands should ensure they keep the below business barriers top of mind.

Overpromising Functionalities

One potential downside to leveraging AI in retail at this budding stage is overpromising functionalities that may not be currently feasible or don’t work as advertised most of the time. Brands may then attract customers who are intrigued by a particular offering, only to become disappointed if it underdelivers on their expectations. This could result in significant negative impacts to the brand’s reputation.

Security Risks

As all brands know, customer data and proprietary information must be safeguarded at all times. Those that choose to experiment with AI must ensure that the AI platforms adhere to compliance and offer minimal risks of a data breach. Additionally, companies that use open systems of any kind must contend with the risk that their proprietary data may also get breached.

Customer Perception Regarding Ethics

As consumers continue to demand more transparency around how their personal data is collected and used, retailers must make this information available as it relates to their integration with any AI systems. Customers must be able to give consent around their privacy and data. Since AI is still a new concept for many people, retailers may need to publicize more information on their use of AI to proactively address customers’ ethical concerns.

Technology Integration Challenges 

To successfully leverage AI in retail, companies will need to invest in experienced talent that can integrate it within their current systems. AI has the power to significantly streamline retail operations, inventory management, and customer service, but brands must make sure they maintain the proper technology infrastructure and staff for successful integration. Otherwise, the potential risks – such as mismanagement of data and clunky customer experiences – may become a detriment to the business.

Benefits of AI in Retail

Despite the challenges that lay ahead for any retailer seeking to take advantage of AI, it can offer major benefits to both the customer and store associate experience, including:

Powering Customer Service Bots

Consumers expect quick and top-notch customer service, regardless of where they’re completing their shopping. One benefit of AI in retail is the ability to help scale customer service by powering bots that can respond to questions online or in a mobile app. AI customer service bots can give instant responses to customers in a multitude of languages – and they’re available 24/7. 

Bots can also quickly track shoppers’ ordered items to provide accurate delivery times, collect and aggregate customer feedback, and field FAQs from shoppers. All of this enables human customer service agents to respond to more complex queries and foster a better sense of customer intimacy.

Personalized Item Recommendations 

To complement their customer service experiences, retailers can also leverage AI to give consumers personalized recommendations when shopping on the website, mobile site, or in the app. Artificial intelligence systems are able to follow people’s purchase patterns, including what types of items they usually buy and their preferred sizes. 

The AI systems can then use this data to prompt customers to purchase complementary items (such as workout leggings to match a top they previously purchased) or products that will likely appeal to their style. Additionally, AI can leverage this information to upsell products or services – such as showing customers higher-end versions of previously purchased items.

Automated Inventory Tracking

Another top use for AI in retail is automated inventory tracking. Artificial intelligence can provide demand forecasting by analyzing data around products and purchase volumes, which retailers can then leverage to buy more or less stock from manufacturers. Offering the right type of inventory that appeals to local clientele can help increase shoppers’ average basket size, and consequently, boost retailers’ bottom lines.

AI supports more seamless communication between inventory tracking systems, which is beneficial for brands offering omnichannel fulfillment options that pull inventory from warehouses, distribution centers, or other brick-and-mortar store locations. By investing in AI for inventory management, retailers can outsource these logistics to free up time for associates to help customers in stores.

Dynamic Pricing

Since customers have access to such a wide variety of retailers these days, they can easily conduct price comparisons while researching a product and choose to buy from the retailer offering the lowest price. Another benefit of using AI in retail is leveraging dynamic pricing features. Dynamic pricing relies on AI predictive analytics to analyze real-time product prices based on inventory levels and customer demand. 

An AI system with dynamic pricing can adjust products’ cost based on this data to offer promotional prices for slower-selling products or higher prices for hot-ticket items. These types of adjustments enable retailers to compete more effectively in the crowded marketplace and drive better omnichannel pricing strategies.

Enhanced Loss Prevention

Brands can also tap AI to enhance their loss prevention tactics. Some retailers have AI systems at checkout counters that can detect products’ weight and determine whether customers are scanning a lower-priced alternative instead. Others employ AI-powered video cameras to watch shoppers’ movements and flag anything that seems suspicious. These features can all complement retailers’ existing loss prevention strategies, such as RFID technology.

Strategies for Maximizing AI in Retail

To stand the best chance at effectively leveraging AI to enhance experiences for store associates and customers, retailers should:

• Brainstorm how AI features can best integrate with their existing technology infrastructure
• Research the best vendors and talent to collaborate with to ensure that features are implemented successfully
• Slowly introduce AI in an ethical way and inform customers that their privacy is top of mind

By employing a methodical approach to exploring AI in retail, brands can take advantage of this new technology while ensuring they remain compliant. A pragmatic method also requires brands to take their time with rolling out new features, as they should make sure everything works as advertised before customers experience it. If retailers are willing to engage in deep research around AI before they plug and play with its many features, their likelihood of reaching innovator status in the competitive marketplace will grow exponentially.

Have questions around whether your business should start experimenting with AI? Speak with one of our experts today.

The post Top Benefits and Challenges of AI in Retail appeared first on NewStore.

BOPIS

What is BOPIS?

BOPIS is an acronym for “buy online pickup in-store.” It lets shoppers make a purchase via an online channel, such as a mobile app or website, and retrieve their order from a nearby brick-and-mortar store. 

How BOPIS Works

Consumers can shop on the retailer’s app, mobile site, or website. On the product details page, they may be able to check inventory availability at a nearby location for store pickup. If that functionality isn’t present, the checkout page should display store pickup as a “delivery” method if their desired products are in stock locally. Many BOPIS (sometimes called click-and-collect) applications allow customers to pick up their orders within a few hours. 

Once the order is ready for pickup, customers will receive a text or email notification. They can then head to the store and find the online pickup location. There, they’ll need to either show identification or open the retailer’s app to confirm their order details and get their purchase. 

Curbside pickup also falls under the BOPIS umbrella. With curbside pickup, consumers can make purchases online, drive to the store once their orders are ready, check in via the mobile app or call the store’s number, and have a store associate bring their orders directly to their cars.

Benefits for Retailers

BOPIS gives customers a reason to visit a brick-and-mortar store, where they may spot more enticing items to purchase on a whim. It also reduces shipping costs for retailers and frees up space for new inventory, as brands can more easily move the stock that’s already available in their stores.

Benefits for Customers

By using BOPIS, customers can avoid shipping fees – generally one of the biggest draws of the service. The other big perk is the immediacy of retrieving orders without waiting for delivery. Additionally, customers who choose curbside pickup can skip in-store lines and save time by getting their orders dropped off at their cars.

BORIS

What is BORIS?

BORIS stands for “buy online return in-store.” This means that shoppers can purchase items online and later return or exchange them in a brick-and-mortar store.

How BORIS Works

Consumers can make purchases on the retailer’s app, mobile site, or website and select their preferred fulfillment method to receive them. If they receive their items and decide they don’t want to keep them, they can either start the returns process on the retailer’s mobile app or site, or they can head directly to the store to initiate the return there. If they opt to start on the app or site, the retailer will typically ask why they are returning the items – which can inform future inventory decisions – and provide a QR code that in-store associates can scan to expedite the process. 

After shoppers arrive at their nearest brick-and-mortar store, they can head to the designated online pickup counter, customer service counter, or main cashwrap to drop off the items they don’t want. The sales associate will process the return and prepare the items to hit the sales floor to be sold again or sent back to the warehouse or distribution center.

Benefits for Retailers

BORIS yields many perks for retailers, including increasing foot traffic in stores – which can then boost the potential for impromptu in-store purchases. It also results in a greater likelihood of converting returns into exchanges if customers see that the item is readily available in another size or color. Additionally, omnichannel returns promote more sustainability due to retailers using less packaging and shipping materials. If items can be added back into the store’s inventory for reselling, they may also be kept out of landfills.

Benefits for Customers

BORIS eliminates the hassle associated with paying for return shipping, and it expedites the entire returns process. It also offers customers a more personalized experience, as they can interact with a store associate who can answer any questions for them. This can ultimately result in greater brand affinity.

BOSS

What is BOSS?

BOSS is an acronym for “buy online ship-to-store.” Retailers typically offer BOSS as a fulfillment option if their operations aren’t set up to fulfill online orders with store inventory or if the local store is out of the customers’ desired items.

How BOSS Works

If shoppers purchase items online that are not available at their nearest store, retailers can offer BOSS to ship the order to the nearest location from another store, warehouse, or distribution center. While this option gives customers fulfillment choice, it can take several days for their order to arrive at the store for pickup. BOSS is especially useful at promoting omnichannel fulfillment because it effectively means retailers will never have to turn away sales due to being “out of stock.” 

Benefits for Retailers

BOSS helps supplement the BOPIS fulfillment option, especially for stores running low on inventory. It enhances distribution efficiency by having warehouses or distribution centers fulfill customers’ orders instead of putting the onus on store associates. BOSS also allows brands to keep smaller physical locations, as they’ll be able to tap into enterprise-wide inventory to complete orders. And, it helps drive more potential sales by increasing in-store foot traffic, since customers will need to visit a store to pick up their purchases.

Finally, shipping orders to stores for pickup eliminates the need to team up with third-party or last-mile delivery platforms – a big cost savings.

Benefits for Customers

In addition to the retailer never having to signal they are out of stock of something, BOSS ensures that customers will receive free shipping on their orders with no minimum purchase amount. Similar to BOPIS, it also gives consumers a more personalized in-store experience, during which they can ask store associates for help if they have questions or request product recommendations.

ROPIS

What is ROPIS?

ROPIS, which stands for “reserve online pickup in-store,” is not exactly a “B” retail acronym, but it falls within the family and is growing in popularity as a fulfillment option. While its concept is similar to BOPIS or click-and-collect, the main difference is that customers don’t pay for their items until they arrive at the store.

How ROPIS Works

With ROPIS, shoppers can reserve items on the retailer’s website or mobile app and visit their nearest store to complete the purchase and retrieve their items. If customers have selected ROPIS because they want to try on or test merchandise before they buy, their first stop in the store is usually the pickup counter or cash wrap. They also may head straight to the dressing room at a specialty retail shop. If they decide the item is the perfect fit or works as expected, they can then proceed with a typical in-store checkout flow to complete the purchase.

Benefits for Retailers

ROPIS promotes higher foot traffic in stores, which can result in more impromptu purchases, as customers may spot items they would like to add to their final orders. It also enables store associates to upsell or cross-sell products before customers check out. 

Benefits for Customers

As mentioned, ROPIS is especially useful for customers who want to try on or look at products prior to making a purchase. This gives customers more flexibility, as they can choose to swap their reserved items for an alternative if they see something better suited to their needs in the store. ROPIS may attract the types of shoppers who prefer to research products before buying them – especially if the products are higher end.

Creating Future-Proof Omnichannel Strategies

Ultimately, implementing BOPIS, BORIS, BOSS, and ROPIS fulfillment options helps retailers develop a future-proof omnichannel strategy. These options all bridge retailers’ digital and physical inventory in a way that enables consumers to enjoy a unified shopping experience, no matter where they start their customer journey.

A unified customer experience across all platforms yields long-term benefits for retailers, especially when it comes to brand loyalty. And in today’s competitive landscape, allowing consumers to shop however and wherever they want – with the promise of getting their purchases quickly – is paramount to success.

Interested in learning how these omnichannel fulfillment strategies can expand your business? Speak with one of our experts today.

The post Retail’s B Acronyms: BOPIS, BORIS, and BOSS appeared first on NewStore.

Waste takes on many forms. There are obvious obstacles that waste our time and misunderstandings that result in repeatedly developing the wrong features. 

Additionally, there are more nuanced risks, such as creating an environment where individuals cannot fully unleash their talents.

To address waste, we must consistently rethink our work processes and habits. But we cannot make changes at random. First, we need to seek to understand whether the waste is avoidable and unnecessary, identify the contributing factors, and explore the available tools to address it.

The main goal is to improve efficiency, but it’s not solely pursuing speed without considering the consequences. It’s about seeking production rates that are both predictable and sustainable.

Fortunately, we can draw inspiration from decades of manufacturing management as developed by Toyota. We are not alone in believing that many of these principles and philosophies translate to our work as product engineers.

The Toyota Production System

The Toyota Production System (TPS) is a manufacturing philosophy that took shape in the 1950s at the Toyota Motor Corporation but has its roots in the preceding decades when Toyota was still a textile manufacturer. Because of its emphasis on efficiency and waste reduction, it’s also commonly known as Lean Manufacturing.

Some of the principles prescribed by the TPS have become common outside manufacturing, like:

• Just-In-Time (JIT), where precise quantities of a product are made as necessary (and not before).
• Jidoka (自働化) or “autonomation,” where automated quality controls allow the machines themselves to stop production until any detected problems are resolved.
• Kaizen (改善) or “continuous improvement,” which encourages employees at all levels to seek improvement, and to extend it to suppliers and customers as well.
• Kanban (看板), where a signboard makes the production flow visible to everybody so it’s easier to understand and manage work in progress.

Along with these operational principles, the TPS describes a few inefficiencies to keep in check:

• Muri (無理), meaning “unreasonableness,” refers to the burden placed on people and equipment that can lead to stress, and ultimately illness or malfunction, decreasing productivity and increasing the likelihood of errors and accidents.
• Mura (斑), or “inconsistency,” is about any irregularities within the production process, from uneven flows and workloads to inequalities in task distribution among people and machines.
• Muda (無駄), which means waste, and is the focus of this article.

A Deep Dive into Muda

Muda, or waste, refers to any activity that doesn’t add value to a final product or service.

The TPS describes seven types of waste that need to be identified and then reduced or eliminated:

• Transportation, which is the unnecessary movement of materials or products. This movement has a cost and can damage goods or equipment, either through accident or wear and tear.
• Inventory, referring to materials or products kept in excess. Storage has a cost, but even more importantly, the items being stored carry their own costs. By sitting in storage, their commercial value cannot be unlocked, and they might become obsolete or unusable with time.
• Motion, which is the unnecessary movement of people during the production process. This can lead to fatigue and increase the risk of injury.
• Waiting, from delays to downtime in the production process, which might propagate further down the line.
• Overproduction, one of the most problematic types of waste, refers to producing more than what customers demand, or before customers demand it. This, in turn, can lead to excess inventory, added transportation costs, or the loss of perishable goods.
• Overprocessing, characterized by the inclusion of excessive value or unnecessary complexity, ultimately raises production costs.
• Defects, which are any errors that force products to be remade, corrected, or even scrapped altogether, and add time and cost to the process.

More recently, an eighth waste was added by management experts to describe inefficiencies related to people:

• Skills, the waste of human potential, closely tied to disempowerment, lack of diversity, inadequate training, rigid hierarchies, and poor communication.

Necessary Waste

When analyzing waste, it’s important to understand its role within the broader business context, as an activity that may appear unnecessary at first glance might, in fact, be contributing value to a product.

For example, distilleries produce excess quantities of whiskey that might not be sold for years or even decades. They do not necessarily incur the wastes of overproduction or inventory because these businesses bet on the assumption that aged whiskey will gain commercial value as the years go by.

In other cases, there are situations where overprocessing can serve as a significant distinguishing factor. This frequently occurs in markets where the showiness of a product or the apparent intricacy of the production process is what attracts customers.

Waste in Product Engineering

We have found through experience that the work of a product engineer is just as vulnerable to the same types of waste as those in a manufacturing company, even if the work is vastly different.

What follows is not an exhaustive list of examples. However, below are some of the ways in which we have dealt with waste in product engineering at NewStore. 

Transportation

Because product teams dealing with software rarely need to move raw materials or finished products around, “transportation” here refers to knowledge transfer between people.

With this understanding, any form of handoff between engineers, product managers, designers, or testers is considered wasteful. Handoffs are precarious as they create an ideal environment for misunderstandings to arise among team members.

Imagine a designer dropping off a mockup for developers to implement before moving to work on the next thing. People often presume this optimizes their time and productivity, ensuring that a designer is never “idle.” But there is a world of assumptions that are left unverified, and intentions that will not be understood. What happens next is that the designer will need to shift focus from whatever they are doing to revisit previous work, or to explain or make changes, while developers wait around.

To minimize this waste, we strive to have individuals from different disciplines work together on the same task concurrently. Maintaining a constant dialogue among team members is preferable to simply passing work over the fence.

This applies to the work of software engineers too. The most common form of handoff comes from pull requests with code changes. While pull requests have their place in the company, pair programming is vastly preferred since a pair (or a mob) of engineers is able to provide more focused and timely critique of what people are doing.

Finally, it is every team’s responsibility to establish a direct line of communication to our customers, and not receive problem reports or requirements through intermediaries, no matter how trusted. While customers are acutely aware of their own needs and difficulties, the solutions often must be worked out through discovery and close, careful analysis of the problem. The involvement of intermediaries can compromise the quality of communication between teams and customers, as they may inadvertently introduce unwelcome assumptions.

Inventory

Unfortunately, it’s all too common for product teams to amass a collection of unreleased features while they wait for the elusive “perfect” moment for them to be finished and unveiled to customers.

But most products are never truly “finished” as they go through changes to match evolving customer needs and market realities. Because of this, high-functioning teams make it a habit to release updates or new features regularly. If a feature is rough, we hide it behind a feature flag, and partner with select customers to trial it together — not before explaining the risks and setting the right expectations about polish. Teams greatly benefit from direct feedback about ongoing development, and customers often feel excited to be part of the process because they understand that their feedback will shape the product according to their specific needs.

Overprovisioning infrastructure is another problem related to inventory waste. Engineers frequently establish generous infrastructure limits, anticipating unrealistically high loads “just in case.” While the practice is often based on intuition, it’s more effective to gather usage metrics and scale hardware based on real needs.

Motion

The waste of motion refers to unnecessary manual work, and nowhere is this more evident than in software testing and releasing. Manual tests and deployments can lead to substantial inefficiency. However, because people are actively engaged in it, because it seems like useful work, because doing things manually reinforces the feeling of being in control, many don’t realize it. Effectively automating these processes instills a remarkable level of confidence to teams and it’s a shame more companies aren’t adopting them.

Engineers also tend to fall prey to what’s known as the “not invented here” syndrome, a bias against products or standards from third parties. When the reason is a false perception of cost, security, or control, it leads engineers to waste effort building and maintaining components in-house that could be more reasonably sourced from external providers.

The desire to stay occupied or seem busy, particularly when forced to wait, drives many individuals to take on multiple tasks simultaneously. This practice is wasteful and counterproductive. Switching between different tasks disrupts a worker’s ability to focus effectively on any one task, potentially leading to burnout. Instead, we strongly advocate for the principle of completing tasks before taking on new work.

Waiting

To always finish what we start, it is helpful to steer clear of work that may become blocked in the future. However, in cases where foresight falls short, and an external factor obstructs a team’s progress, it becomes the team’s responsibility to proactively remove the obstacle and roll up their sleeves, if necessary. For example, when one team’s capacity is stretched thin, but another team urgently needs something from them, we advocate for the latter team to collaborate in removing the blocker rather than waiting for it to go away. This might mean working on the busy team’s components or helping them reorganize their work.

“We can’t work on it because we’re waiting for the requirements,” is a statement we’ve all heard at some point in our careers. But we discourage waiting to be told what to do. Teams should be made up of people who are not only problem-solvers but also critical thinkers and proactive doers. It is a collective responsibility to discover and refine requirements. In pursuit of this goal, we place our trust in, and actively promote, direct interactions with our customers. This engagement is fostered through biweekly calls and occasional visits to their stores, enabling us to better understand the challenges and opportunities they present.

Additionally, as mentioned above in the transportation section, handoffs are to be avoided as much as possible. Not only do they introduce potential misunderstandings into our discussions, but they also result in team members having to either wait or switch their focus, depending on their position in the handoff process. Real-time collaboration, whether in person or through the numerous remote collaboration tools at our disposal, is significantly more favorable.

Overproduction

As mentioned, overproduction is considered one of the most detrimental forms of waste. Producing more than the current demand not only results in wasted efforts but also puts excess inventory at risk of loss.

In software development, the equivalent is the accrual of unused and potentially unnecessary features. It’s common for teams to postpone a release because they consider the feature to be “incomplete,” even if it could already benefit a subset of customers. Not releasing a feature prevents the team from gathering important feedback that could guide their next steps.

This habit of releasing early and as often as possible aligns perfectly with agile delivery practices.

Is the feature addressing the problem correctly? Is the feature addressing the correct problem at all? How “complete” does it need to be to satisfy all our customers’ needs? Teams should always be able to answer questions like these.

Overprocessing

Because software engineering typically doesn’t focus on mass production, waste often materializes when a product is refined excessively beyond any practical utility.

Frequently, this results in the overengineering of systems, leading to unnecessary complexity, unforeseen problems, and eventually, an increased maintenance burden that slows teams down. Overengineering can also be seen when infrastructure is configured to handle far more capacity than required, often remaining mostly idle.

Processes themselves are vulnerable to this kind of waste. Many teams incorporate blocking activities into the product development process, such as crafting high-fidelity prototypes, conducting manual testing, or reviewing code, with the misinformed belief that these steps will improve quality, reliability, or security. While these practices do help, they also introduce friction to change, thereby impeding the swift implementation of improvements or corrections.

Rather than fostering predictability, additional obstacles often tempt teams to batch work into fewer, larger releases to minimize waiting. Consequently, this transforms what could be small, straightforward, low-risk releases into convoluted, high-risk gambles.

Quality is not a step that can be affixed to any process; rather, it is best achieved through continuous collaboration without artificial barriers.

Defects

Defects fall into two broad categories: building things incorrectly and building incorrect things.

Building things incorrectly includes product defects and bugs, as well as issues like downtime and data loss from unstable or insecure infrastructure. Support requests seeking clarification indicate defects as well, meaning user interfaces or documentation can be improved. These situations are wasteful as they necessitate the allocation of effort to address and prevent these problems from happening again. The Toyota Production System advocates a zero-tolerance stance towards these types of defects. It involves both automating quality control checks and empowering even the least significant worker with the authority to halt production immediately upon finding a problem.

Building the incorrect thing is a result of not validating assumptions and going at it blindly. If assumptions can’t be confirmed before the product is built, teams should try to do so in the earliest possible stages. Talking with customers and end-users is essential, as is launching minimum viable product versions that people can test and give feedback on.

Skills

The waste of skills is a relatively recent category and deals with the loss of human potential.

Low-trust environments, where people are left out of the decision-making process, are especially prone to overlooking important ideas and insights. Restricting the involvement of designers or engineers in the initial product decisions can lead teams to scrap their strategies when they prove unworkable. In other instances, serviceable but suboptimal approaches are adopted, resulting in a sacrifice of innovation, and missed opportunities.

A team must be responsible for all decisions related to the product it builds, and every member within the team should be  given the chance to participate.

The absence of diversity within a team also results in the squandering of valuable perspectives. Monocultural teams, even well-meaning and empathetic ones, tend to possess unconscious biases and are often ignorant about perspectives beyond their own. Because of this, they may struggle to release a product that fully caters to different realities, potentially neglecting critical aspects of user safety, privacy, and accessibility.

To address these challenges, fostering a culture of trust, inclusivity, and empowerment is imperative. Every team member should feel safe and motivated to actively contribute. It’s a tremendous waste to hire bright, passionate people and then push them to set aside their critical judgment or adopt a “just following orders” mentality.

Conclusion

In our efforts to combat waste within our teams, we’ve come to realize that the strategies we’ve adopted align with several popular agile practices. These practices include delivering a working product that is constantly evolving, fostering customer collaboration, employing Kanban boards, practicing test-driven development, engaging in pair programming, and other techniques that allow us to achieve fast feedback loops and attain predictable, sustainable delivery workflows.

Beyond being mere complements, agile and lean methodologies reinforce each other. Together, they create a virtuous circle that empowers teams to move faster, while also providing the insight and authority to continuously adapt and adopt even more effective practices.

The post The Wastes of Product Engineering appeared first on NewStore.

What is Sell-Through Rate and How Do You Calculate It?

Sell-through rate refers to the amount of inventory a brand sells relative to the number of products bought from the manufacturer. To calculate their sell-through rate, retailers should divide the number of products sold by the number of products purchased from the manufacturer. Then, they should multiply that number by one hundred. That percentage is their sell-through rate.

Many retailers calculate sell-through rates on a monthly basis to ensure they stay on track to hit sales goals. This then provides companies with multiple benchmarks to review at the end of the year, which they can use to determine whether sell-through rates fluctuate at certain times.

Retailers seeking a strong sell-through rate should aim for 80% or above. However, according to a study conducted by Coresight Research, non-grocery retailers typically hover around a 60% sell-through rate for full-price products. 

Retailers with favorable sell-through rates can treat those as indication that their sales performance is strong. Those with lower rates may want to review their marketing tactics and inventory management to understand where they can make changes.

The ranges for sell-through rates can fluctuate based on market trends and seasonal products. For instance, if customer demand for a certain type of item is extremely high due to a specific trend, or shoppers clamor to buy particular products during the holiday season, those factors can drive up the brand’s sell-through rate.

Read below to discover the effects of a favorable sell-through rate and several ways retailers can increase their rates.

Why Sell-Through Rate Matters

Sell-through rates help brands balance supply and demand. For example, brands that purchase too many products from manufacturers will have lots of leftover stock. This will then eat into their profit margins and increase storage fees. 

On the flip side, brands that purchase too few products will not meet shoppers’ demands and may end up losing them to a competitor. Retailers that effectively monitor their sell-through rates will stand a much better chance at ensuring their longevity. 

The effects of a strong sell-through rate also include:

• Reducing markdown losses: Retailers typically mark down items that are not selling well. However, they will have fewer products sold via price reductions if they order the right amount of inventory for customers.
• Cutting storage costs: Maintaining stock in brick-and-mortar locations is expensive, and retailers do not want excess inventory collecting space where new products can live. By achieving a favorable sell-through rate, brands can ensure they use their physical retail space efficiently.
• Better inventory management: Inventory management is critical for any retailer with omnichannel shopping options. Examining the sell-through rate helps retailers determine which products are selling well and which aren’t. The findings will help inform stocking needs and may also forecast future trends.
• Developing metrics for success: Retailers can aim to surpass their sales targets by measuring their sell-through rate. To achieve a strong rate, retailers will need to order items in a more strategic manner. They may also swap manufacturers and tweak their inventory to strive for a better rate.

3 Strategic Ways to Improve Sell-Through Rates

Brands can leverage several strategies to boost their sell-through rates while optimizing omnichannel experiences for customers.

Enable Endless Aisle Shopping

Endless aisle technology lets store associates access and sell inventory from a variety of distribution centers and locations. It also offers insight into real-time inventory so they can view the full product catalog across the enterprise.

With endless aisle, store associates can help customers make purchases if their desired items aren’t available in a particular location. For instance, if a shopper wants to buy a shirt not available at their nearest store, an associate can leverage endless aisle technology to check if a nearby distribution center or store location carries the item. If the item is available in another location, the store associate can complete the sale on the spot and ship the item directly to the customer. 

As a result, the retailer will never lose a sale and will always meet the customer’s demand.

Endless aisle also ensures that retailers fulfill orders from all locations carrying their stock. This then frees up additional storage space.

Leverage Store Fulfillment Options

Retailers seeking to move inventory from brick-and-mortar stores can offer customers a variety of store fulfillment options. Store fulfillment allows retailers to complete and ship orders from their physical locations. Customers can then retrieve their orders by choosing from buy online pickup in-store (BOPIS), curbside pickup, or ship-from-store options. Store fulfillment provides more convenience to customers, especially those who need their orders in a quick time frame.

Instead of routing orders to a warehouse or distribution center, brands can sell the products in their brick-and-mortar stores first. As a result, this clears more space for new inventory. In-store shoppers may then spot that new inventory during a visit and make a purchase – therefore increasing the sell-through rate.

Offer Retail Promotions

Brands can also achieve a better sell-through rate by effectively leveraging retail promotions. Certain types of tactics, like percentage discounts, enable them to move inventory that’s not selling well by advertising a percentage off a certain item or an order threshold. Percentage discounts may also fuel sales from inactive shoppers, motivating them to make impromptu purchases due to the limited-time deal.

Retailers with excess inventory that need to sell more units can use tactics such as tiered promotions, buy one get one (BOGO) deals, and other bundling opportunities. These all encourage shoppers to purchase more products in one transaction and are especially useful for selling complementary products – such as socks and shoes – or items with expiration dates or shorter shelf lives.

How Inventory Visibility Impacts Sell-Through Rates

Retailers must maintain up-to-date supply chain information so they can attain a favorable sell-through rate. Inventory visibility refers to the practice of tracking the movement of inventory throughout the sales cycle in real time.

This gives retailers important data on sales, stock levels, and product demand. The data then enables them to make more informed choices related to inventory management. Some of these decisions may include forecasting demand for certain items and avoiding overselling or underselling inventory.

Additionally, inventory visibility can empower store associates to cross-sell or upsell various products. Store associates can also leverage the visibility to drive purchases of current inventory before the retailer buys additional items from manufacturers.

To improve their sell-through rates, brands can invest in solutions like omnichannel order management systems and RFID technology. 

An omnichannel order management system captures all customer, inventory, and order data in one platform. It also lets retailers engage in more efficient operations by managing all inventory across the enterprise. They can enable item-level order routing based on availability, location, and fulfillment capacity.

Meanwhile, RFID technology allows brands to track inventory from initial shipment to point of purchase via wireless communication. This ensures a high level of inventory accuracy and supply chain visibility, as they can access real-time data on sales and stock levels at any time and from any location.

Why Sell-Through Rate is an Important Metric

Ultimately, setting – and then exceeding – sales goals is key to any retailer’s success. Sell-through rates help brands identify their supply chain’s effectiveness. They also assist brands with standing out in a competitive marketplace. 

A favorable sell-through rate indicates that a brand is accurately purchasing top-selling products from manufacturers. A low sell-through rate demonstrates that brands may need to dig into why their inventory is moving slowly.

The good news is that lower sell-through rates are fixable – if retailers are willing to invest in solutions like inventory visibility and omnichannel order management. These solutions will support faster inventory turnover, which will subsequently enhance retailers’ bottom lines.

Interested in learning how your business can improve its sell-through rate? Speak with one of our experts today.

The post How Retailers Can Maximize Their Sell-Through Rate appeared first on NewStore.