With Christmas 2015 shaping up as the first big test of omni-channel strategies for many retailers, research conducted by HSO into the views of UK consumers demonstrates just how crucial it is that retailers create a synchronised stockpile to efficiently manage stock across the online and physical ‘bricks and mortar’ worlds.
The HSO survey shows that the moment of truth often comes when an item is shown as out of stock online, an experience common to the vast majority (92 per cent), of consumers. In this scenario, if retailers suggest that the stock is available in a store for collection as an alternative purchase option, the survey shows that the sale can be saved.
45 per cent of consumers buying clothes, for example, said they would be prepared to travel to a nearby store if the item was out of stock online, enabling retailers to rescue a large volume of sales simply by adopting a more coordinated approach to their online and in-store stock, so often viewed by retailers as separate operations. 37 per cent of customers purchasing DIY items and 36 per cent of those buying toys and games would do the same. While many respondents would simply look elsewhere for the product online, clearly highlighting the pitfalls of out of stock items online, a more joined-up stock management approach will clearly have significant value for many retailers.
“That represents a huge revenue-generating opportunity for retailers, especially in the lead-up to Christmas, and this year with the march to omni-channel gathering pace it is critical that they take advantage,” says Hector Hickmott, HSO sales director. “To make it happen though, retailers need to move away from traditional siloed approaches to stock management and start implementing technology that supports a single view across the physical and online worlds.
“In the past, retailers have often maintained separate ring-fenced stock pools for their physical store-based and online environments,” he adds. “The lack of integration can have serious consequences. Without an overall view of sales demand and real-time single stock management, retailers will miss out on online sales and end up with a surplus of unsold stock in shops, using up expensive floor space and ultimately being sold at low margins later in the year. It’s a problem made worse by a tendency to over-stock in store at busy times to avoid missing sales opportunities.”
“To address these challenges retailers increasingly need to look at putting in place technology that allows them to coordinate and integrate their stock management approaches across the online and physical store environments – in truth, the retailers who ultimately succeed will ensure this process is seamless for the customer who in fact, should never be told that a product is out of stock online and always offered an alternative way to purchase in-store.” says Hickmott, “We believe enterprise resource planning (ERP) meets that need.”
“ERP enables retailers to achieve a 360° view and maintain a single stock pool across the whole operation, while at the same time obtaining real-time updates on the stock held in that pool,” he continues. “As none of the stock is ring-fenced but instead distributed on a ‘first come, first served’ basis, this approach allows businesses to satisfy orders across all channels more easily. Moreover, the ability to receive regular updates based on sales throughout the day also gives retailers confidence that the pool stock figure is accurate.”
“This in turn allows them to manage the implications on forecasting future sales and predict long-term stock replenishment needs,” adds Hickmott. “The same core capability also helps retailers strike a balance between having enough stock to meet customer demand while making sure they don’t overstock and end up marking products down.”
The survey findings also indicate that ERP can have a key role to play not only in retaining customers, but also in winning them back. When asked what factors would make them return to a retailer if they were frustrated by a product being out of stock online, the top two answers were ‘the delivery of great customer service’ and ‘the guarantee of being able to get the item and size I want’, each of which was the favoured option of 33 per cent of the sample.
Once more, ERP can be key for retailers, enabling them to provide a better customer service. Again, it comes down to the ability to integrate systems to deliver a holistic view. This gives businesses a broad insight into each customer, so they can instantly see when each one purchased an item online and when they bought something in-store as well as the volume of transactions across all channels. Ultimately, this knowledge also means that the business can start to promote related products, upsell and cross sell and provide a quality of customer service that is better all round.
“It illustrates the importance of agile systems and processes both in retaining and in winning customers,” says Hickmott. “And today, with Christmas providing them both challenges and opportunities, all retailers need to appreciate the benefits an ERP software platform can bring in, delivering enhanced customer engagement and a competitive edge.”
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