THE OMNICHANNEL HOLIDAY CHALLENGE WITH STORE INVENTORY AND FORECASTING

Holiday shoppers have just a few more days to get their shopping done. Do they order online and get it shipped? Do they order online and then pick up in store? Or do they go into a store hoping to walk out with the items they want to purchase? Retailers have the challenge of meeting all of these needs, many of them using store inventories as distribution centers to handle online purchases, whether shipping it to the customer’s home or having it available so they can pick up the item in the store.

An online customer who is having their products shipped does not care which store or warehouse handles their purchase. A shopper in the store or on the way to a store does – they expect the item to be available on the shelf. Retailers are using different strategies to manage these needs. Some, such as Target, are holding inventories back from online purchasers in order to keep inventory on the shelf for their in-store shoppers. In Target’s example, an online shopper may try to go online and buy or reserve an item in store but are unable to do so. Other retailers, like Toys ‘R Us, have a “first-come, first-served” strategy. The big challenge is for retailers to determine, by product and by store, how to divvy up the store’s stock, and need to forecast in-store purchases to try to have the right amount of inventory on the shelves.

 

Tracking item-store inventories as real time as possible is the best way for these retailers to make these forecasts. Retailers without inventory systems who can keep up with purchases are having to keep extra available in the store and not online, in order to avoid the mistake of selling the same item to two customers around the same time.

Source: Chicago Tribune.com, Wall St. Journal

2016 WAS A GREAT YEAR FOR DIY RETAIL

The holiday season is upon us, and how DIY retail will fare remains to be seen, but 2016 by most accounts has been a great year for DIY retail. The North American Retail Hardware Association (NRHA) is estimating industry growth for 2016 to end at 5.8%. The Home Improvement Research Institute (HIRI) is estimating a little higher, at 6%. The US Census Bureau reports home improvement industry sales through September at 6.7% growth over 2015.

Building materials and home improvement retail sales are 3 to 1 higher than overall retail sales increases for this year.

What has led to the success, and which areas in the DIY space have seen the best results?

Most economists agree that the renewed housing market seen in 2016 will continue into 2017. Add to that higher consumer confidence rates, multi-family housing construction has led to higher sales at home centers and lumber dealers. Remodeling projects and big-ticket purchases are stronger. Big ticket items, such as appliances, have seen the biggest sales uptick in the segment.

Accelerated Analytics DIY customers, using their retailer POS data to analyze sales and inventory, are experiencing the same trends. Across the Accelerated Analytics customer index, June and July showed poor results, followed by an improving August and strong September. 20% of Accelerated Analytics customers’ sales tickets are big ticket items, over $900 per sale. These items were identified as appliances and other expensive items, along with supporting/supplemental products.

The NHRA is predicting 2017 sales to continue this trend and that home improvement product sales should continue to outpace overall retail sales in 2017, anticipating DIY industry growth in the range of 5%.

For more industry stats and observations, download the Accelerated Analytics Retail Industry Briefing Book, which is a monthly publication of key retail industry trends, published to over 7,000 subscribers per month.

Sources: Accelerated Analytics, Hardwareretailing.com

ACCELERATED ANALYTICS LUXURY FRAGRANCE VENDORS POISED TO GROW 5.9% BY 2026

Future Market Insights released a report today that estimates the global perfume market is estimated to reach $39.67 billion by the end of this year, and expects growth of this segment of 5.9% over the next ten years. The firm looked at several Accelerated Analytics beauty and fragrance companies for its report, including Estee Lauder Companies, LVMH, Coty Inc., L’Oreal International, Elizabeth Arden Inc., Shiseido Co. Ltd., Puig and Parlux/Perfumania Holdings Inc.

The reports found that demand is being bolstered by the millennial consumer segment, as well as increased online retail strategies from these companies. Female fragrances are leading the increase, with year-over-year increases from 4-5.2% over 2015 to 2026. While online retailing is the most attractive shopping means to this segment of consumers, in-store remains 80.5% of the market share, due to the personal and olfactory nature of fragrance marketing.

Millennials are drawn to products that have natural ingredients. Fragrance vendors are offering more “Eau Fraiche” (alcohol free) products.

The Western Europe market is the largest consumer, and expected growth consumer, of fragrance products, followed by North America.

To get more retail insights from the Accelerated Analytics team, register for our (free) monthly Retail Industry Briefing Book here.

Source: Luxury Daily

HOLIDAY SHOPPING IS HERE …..ARE CONSUMERS WAITING UNTIL AFTER ELECTION RESULTS?

The National Retail Federation (NRF) conducted a survey last week, and found that more than 25% of shoppers say the election will affect their spending.  43% of consumers also state they are being more cautious with their spending because of election uncertainty.

Retailers are seeing this effect and are making adjustments. Target and Wal-Mart are adjusting their holiday season marketing ahead of November 8.

In addition, retailers are challenged to get their marketing messages out amid all of the election noise. “Everywhere you turn — whether you’re picking up a newspaper or watching television — political advertisements are taking up ad space that retailers typically use to get holiday shopping on the minds of consumers across the country,” NRF President and CEO Matthew Shay said.

Once November 9 rolls around, the NRF predicts the holiday shopping season will kick up. The NRF is still predicting a 3.6% increase in retail spending in November and December, which would make 2016 the most successful holiday shopping season in years. This forecast is in alignment with other predictions from Deloitte, RetailNext and Kantar retail, reports CNBC. This spike is expected regardless of who wins the presidency.

Source: WSJ, NRF, CNBC

FALL IS HERE…WILL ECONOMIC FACTORS RISE?

Economic indicators for August dropped, but 2016 overall is still growing.

Home Sales: Existing-home sales dropped .9% in August, marking the second month in a row of decline. However, year-over-year sales are up .8% over last year. While new home sales have been steadily rising, existing-home sales make up 90% of the home sale market. The National Association of Retailers reports that with the housing market in 2016 being the strongest sector of the economy over the past two years, the market may be a “victim of its own success”. Sales early this summer reached the highest levels since 2007, which has led to an increase in prices and a shortage of inventory. The average home price is $240,200, up 5.1% from 2015. The NAR feels an increase in home building would solve the issue. A Commerce Department report this week indicated building permits for single-family homes, the largest segment of the housing market, increased in August.

Manufacturing: The Conference Board reported its leading economic index, weighing 10 different economic indicators, dropped .2% in August. The decline in attributed to the average workweek of production workers and the amount of new orders. However, in the six-month period ending in August, the index increased .9% to an annual rate of 1.8%, which is in line with slow growth reported in gross domestic products. It is forecasted to grow at a 3% pace.

Retail Sales: US retail sales were up 1.9% in August, which was down from 2.4% in July. Retail sales had shown strong gains in the spring but has slowed through the summer months. Sales at department stores fell .6% and general merchandise store sales were flat. Building and garden equipment store sales dropped 1.4%. Retail sales are expected to be on the rise, with Halloween sales expected to boom and the 2016 holiday outlook expected to be positive, especially in e-commerce sales.

Sources: Wall St. Journal, Market Watch

BRING ON THE HOLIDAYS….AND ECOMMERCE SHOPPING

To gear up for what is expected to be a very high e-commerce driven holiday shopping period, UPS says it will hire 95,000 seasonal workers this year, and FedEx Corp will hire close to 150,000. Overall retail hiring is expected to be the same as last year’s high numbers, but a shift to preparing for high online sales with those jobs is clear. Target Corp announced plans to hire 70,000 workers at distribution and fulfillment centers, up 15% from last year.

eMarketer announced survey results that found while moderate growth of 3.3% is expected for holiday retail overall, ecommerce is anticipated to make its biggest jump since 2011, up 17.2%. 71% of shoppers polled said they would make some to all of their gift purchases online. Rubicon Project found similar results in their survey, finding 73% of respondents will shop online, and that 22% of shoppers plan to do all of their holiday shopping online. The report shows that online shoppers will spend 64% on gift cards, 57% on apparel and accessories, 46% on toys and 37% on technology.

Cyber Monday is on track to produce higher results than Black Friday. A shift in the holiday calendar this year is also expected to help retailers. Christmas falls on a Sunday rather than a Friday like last year, giving last minute shoppers an extra Saturday to shop. Hanukkah begins 18 days later than in 2015, which should help generate sales in the latter part of December.

Source: NRF Smartbrief, Chain Store Age, Drug Store News, Fortune

HOME IMPROVEMENT SPENDING EXPECTED TO REACH $321 BILLION BY MID-2017

After the housing crash of 2006, the US home remodeling market saw its worst downturn in history. Growth in home improvement spending has grown on average about 4.9% since then. Now, with home equity back and home prices on the rise, people are putting their cash to work to remodel and repair their homes.

Growth is expected to reach 8% by the start of 2017 and annual spending should reach an estimated $321 billion by the middle of next year, according to a new report from Harvard’s Joint Center for Housing. Kitchen and bath remodels are popular, along with high-yielding investments such as replacing insulation. Many are choosing to do multi-room remodels at the same time, up 67% from a year ago.

Growth in home remodeling is sure to boost sales for retailers such as The Home Depot, Lowe’s and Sherwin Williams.

Vendors who want better insights into their sales and inventory at their DIY retailers can CLICK HERE to learn more about our POS reporting solutions. 

Source: CNBC

IT’s DAYS OF SUPPLY INSTEAD OF WEEKS OF SUPPLY FOR DIY RETAILERS LIKE HOME DEPOT

While the DIY retail segment is currently booming – Home Depot is targeting a 15% sales growth by 2018 – their strategies for inventory in their stores is changing. “Get comfortable with days of inventory, not weeks,” Tom Shortt, Home Depot’s senior vice president of supply chain, says is the message going out to stores. 

Rather than filling its warehouse stores with inventory, Home Depot wants fewer items on its shelves and wants those items within customers’ reach. Online shopping is making retailers think of better ways to profitably serve online shoppers and have inventory in stores, as well. They need to decide if they will ship to consumers from a distribution center or store.

WalMart and Target have also made changes to in-store inventory levels. WalMart’s inventory levels rose slower than sales, helping to improve their gross profit margins in the first quarter.  Boosting sales and stocking less items increase the percentage of cash they get back from the amount they invest in inventory. The strategy is to put less inventory in the stores and replenish more frequently based on demand instead of a forecast.

Home Depot’s strategy is called “Project Sync” which includes such changes as seeing suppliers send 2 trucks five days a week, versus 5 trucks 2 times per week.

Monitoring the return on invested inventory capital and tracking consumer demand closely in order to manage inventory and replenish based on demand can only be accomplished with frequent analysis of POS data in stores, looking at SKU-Store sales and on hands, trending days of supply and sales to stock ratios.

Source: Wall St. Journal

HOUSING GAINS AND MILD WEATHER KEEP HOME DEPOT GOING STRONG

The Home Depot’s stock opened at a record-high level today, after announcing they topped first quarter expectations. Mild weather and a strong housing rebound are attributed to their successful first quarter. Revenue increased to $22.76 billion from $20.89 billion. Same store year over year sales rose 6.5% overall,up 7.4% in US stores.

Chairman and CEO Craig Menear said the company saw “week to week demand spikes caused by weather variability”. Home Depot originally forecasted 2016 earnings of $6.12 to $6.18 per share, with revenue predicted to increase 5.1-6% and same store sales to rise 3.7-4.5%. With its positive first quarter, Home Depot now predicts 2016 earnings of $6.27, sales to rise 6.3% and same store sales to rise 4.9%.

Having cited a strong housing rebound as another reason for a strong first quarter, steady growth for the housing market looks like it will continue. The National Association of Home Builders reported continued strong sentiment in May. Low mortgage rates are fueling demand that have boosted expectations for home sales in the next six months to the highest level of the year. More housing data is due out later this week, including housing starts and existing home sales.

Source: US News & World Report, Wall S. Journal

APRIL RETAIL SALES REBOUND. WILL RETAILER STOCKS RECOVER?

Wall Street analysts are calling last week “Retail Wreck” due to numerous retailers’ news of poor sales, profits and future outlook on consumer spending. April retail sales came in higher than expected with a positive 1.3% gain, the highest gain in a year. Will strong sales in the first month of the second quarter help with a stock rebound for retailers?

Last week’s poor results were reported by many retailers, including Macy’s, Kohl’s and Nordstrom’s. Department stores are also responding to the strong online sales versus in-store that was reported, with online sales soaring 10.2% over last year. They are struggling with putting inventory in the right place to meet their increasingly complicated inventory and distribution demands.

Investors are waiting for home-improvement results this week from Home Depot, Lowe’s, Target and Wal-Mart to try to determine if the profit misses in the retail space is a problem just for department stores and apparel makers, or if it is a broader problem ahead for the consumer-driven US economy.

See the Accelerated Analytics’ blog from last week, reporting on the stock decreases across several retailers and apparel manufacturers: http://www.acceleratedanalytics.com/blog/2016/5/12/retail-stock-market-was-a-bear-yesterday-dropping-to-worst-l.html and continue to monitor our blog http://www.acceleratedanalytics.com/blog/ page this week as additional retailers report on Q1 results.

Sources: The Wall Street Journal, USA Today

WILL IT BE A HAPPY MOTHER’S DAY FOR RETAIL? WILL IT TOP 2015 RECORD-BREAKING TOTALS?

In 2015, 84.2% of American celebrated Mother’s Day, spending an average of $173 per person, totaling spend of $21.2 billion. This was the highest spending per person, up from $163 in 2014. Will 2016 be a strong year for retail Mother’s Day sales? Expectations are that Mother’s Day spending will be similar to last year’s record-breaking totals. 7,000 consumers surveyed by the NRF (National Retail Federation) said they will spend the most on jewelry, followed by outings (lunch/dinner/brunch), flowers and gift cards.

Department and Specialty stores had the highest retail traffic in Mother’s Day sales last year, followed closely by online sales and discount stores:

Source: Fundivo, MarketWatch

MACY’S ANNOUNCES Q4 SALES DECLINED 5.2%; LOOKS FORWARD to 2016 EXPANSION

For the period ending January 30, 2016, Macy’s total sales declined 5.2% to $8.87 billion. Same-store sales fell 4.3%, slightly less than the 4.7% decrease analysts were expecting. Macy’s did announce it had another year of double-digit growth in its online business, attributed to high increases in mobile traffic and conversions.  In looking back on the year, chairman and CEO, Terry J. Lundgren, pointed out many expansion initiatives. “We expanded our online capacity with a new state-of-the-art fulfillment center in Tulsa, Oklahoma,” he said. “We announced licensed department arrangements with companies including LensCrafters, Men’s Wearhouse and Best Buy to add new categories to the Macy’s store assortment. We completed the acquisition of Bluemercury, which added capabilities to our signature beauty business. We developed and launched Macy’s Backstage, which will be piloted as an in-store concept this spring. And we began initial testing of online selling in China in a new joint venture with a Hong Kong-based partner.” Macy’s has $400 million of planned cost savings and will have more conservative inventory planning in 2016 to improve its operating margins. It does expect to see a 1% comp-stores decline in 2016.

Source: Chain Store Age

NRF SAYS MILLENNIALS WILL SAVE THEIR TAX REFUNDS INSTEAD OF SPLURGING ON RETAIL

Retailers have depended on American’s using their IRS tax refund checks to boost February and March sales. However, according to a survey conducted by the National Retail Federation (NRF), more than half of those expecting a refund are planning to save their money instead of spend it. This is the highest level since the NRF has begun conducting the survey.

Millennials, ages 18 to 24, show 57.3% planning to save and 27.4% planning to spend their refunds on everyday purchases like gas or groceries. In the 25 to 34 year old bracket, 52.3% plan to save and 45% plan to repay debt.

In addition to saving, 22.4% of Americans will save their refunds while 11.4% will plan a vacation. “Consumers are building their spending power and boosting their confidence as they set aside their checks from Uncle Sam,” NRF president and CEO Matthew Shay said. “Americans this year see refund season as a time to improve their financial health by using their refunds to get ahead on savings goals and plan for bigger purchases in the future. Money saved is money waiting to be spent.”

As refund checks start to get into Amercan’s hands, it will remain to be seen if this holds true for future retail spending and whether they will actually save the money or decide to shop instead.

Source: Chain Store Age

LOWE’S ANNOUNCES Q2 EARNINGS RESULTS ARE UP, FALLING JUST SHORT OF ANALYSTS EXPECTATIONS

Lowe’s reported an 8.4% increase in profit for Q2 2015, with net earnings of $1.3 billion and $1.20 a share. This up from last year’s Q2 earnings of $1.04 billion and $1.04 per share. Analysts were expecting results of $1.24 per share.

The home improvement retailer’s net sales rose 4.5%, which was in line with expectations. Same store sales at stores open at least a year were up 4.3%.

“We posted solid results for the quarter and were able to capitalize on big-ticket market share opportunities with strong growth in categories like appliances and outdoor power equipment,” Lowe's CEO Robert Niblock said in a statement.

As of July 31, 2015, Lowe's operated 1,846 home improvement and hardware stores in the United States, Canada and Mexico representing 201.4 million square feet of retail selling space.

For fiscal year 2015, Lowe’s expects to add 15 to 20 new home improvement and hardware stores, and expects total sales to increase 4.5% to 5%.

Sources: USA Today, MarketWatch

BACK TO SCHOOL SHOPPING EXPECTED TO RISE THIS YEAR

A Consumer Pulse survey of parents of K-12 and college students found that 56% of respondents plan to spend more money per child this year on back-to-school supplies.

K-12 parents plan to spend an average of $873 per student, while parents of college students plan to spend more than $1,100 per student. 38% of parents intend to purchase technology products, on average spending $400 compared to $278 on apparel. Technology products are needed as student use of technology in the classroom increases, requiring parents to buy laptops, tablets and mobile phones.

61% of those surveyed said store sales and promotions will be the main determinant of when and where they will do their back-to-school shopping.  74% of parents said they prefer to shop at big box retailers or chains to get a better deal.

Online shopping and mobile shopping are increasing with parents. 50% of the parents had clicked on an online ad in the past 7 days and 48% had clicked on a mobile ad. Over 40% of parents stated they made a purchase within the past week based on a mobile or online ad.

Source: Retailing Today

SLUGGISH US CONSUMER SPENDING START TO 2015

January US consumer spending barely rose .1 percent, despite cheaper gasoline and a buoyant labor market. Economists are speculating that consumers were using their extra income to pay down debt and boost savings. This was below Wall Street’s expectations for a .4 percent increase.

"Should we be worried about the weakness of underlying sales over the past two months? Possibly," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

"But all the conditions are in place for a period of very strong consumption growth. We still expect to see that strength come through in the retail sales data soon."

The economy has added more than a million jobs in the past three months and the number of those seeking jobs hit its lowest level since 2007 in December.

Resource: Reuters

Retailers Ready For Solid Second Quarter

April 18, 2014

Those looking to understand how the retail industry will perform in the second quarter and beyond can gain an interesting perspective from the outlook shared by one of the world's largest diversified packaging companies.

First quarter sales in the display and packaging division at Sonoco increased 6% to $153 million and operating profits grew 53% to $5.4 million, while sales in the consumer packaging segment were essentially flat at $465 million but operating profits grew 14% to more than $48 million.  The performance of both divisions helped the company generate earnings per share of 52 cents that exceeded analysts' estimates by a penny during the period ended March 30.

The numbers are noteworthy because Sonoco's performance and second quarter outlook offers an early indication of upcoming retail promotional activity, considering demand for its consumer packaging and display and packaging services are fueled by retail and CPG companies.  This is especially true in the case of the display and packaging group which designs, manufactures, assembles, packs and distributes all manner of temporary, semi-permanent and permanent point-of-purchase displays.  Also included in the performance of the division are supply chain management services such as contract packing, fulfillment centers and retail packaging.

This exposure to the retail industry, coupled with the short lag between the end of Sonoco's quarter (March 30) and when it reports results (April 16) offers a near real time look at industry demand.

"Much of the negative impact from severe winter weather occurred in January and February.  As weather improved in March, we saw a strong rebound in customer orders across most of our businesses and a sharp improvement in operating performance," said Sonoco president and CEO Jack Sanders.  "Enterng April, customer orders appear to be running at more normal levels, in line with volume expectations and our second-quarter earnings guidance, which anticipates continued improvement in operations."

Source: Retailing Today

Digging Out Of One Of The Longest Winters Ever: The Good, The Bad And The Ugly

March 10, 2014

For meteorologists, scientists, weathermen and millions of others, this winter has been absolutely dreadful.  And, although spring is on the horizon, much of the country is still covered in snow.  In fact, the nation's 21st winter storm just wrapped up this past weekend.

When it comes to the impact weather has on businesses, most industries, including retail, manufacturing, construction and auto, recognize the ebb and flow of weather as a significant part of their plans.  For retailers, weather forecasting models can impact everything from merchandising decisions to shipping and receiving, and even sales and staffing.

Looking back on the past few months, it's evident the 2013-2014 winter season has been a serious thorn in the side for the nation's largest industries.  In the Federal Reserve's recently released "Beige Book," a summary of commentary on current economic conditions, "weather" was mentioned 119 separate times to describe November and December alone.

Just how severe was this winter?

• Ohio had used almost a million tons of salt for its roadways as of late February, compared with 630,000 tons used on average each winter
• Erie, Pennsylvania became America's snowiest city with a population over 100,000, recording a whopping 123.9 inches of snow
• According to the National Oceanic and Atmospheric Administration, December and January averaged over the contiguous 48 states were the third-coldest months in the last 30 years
• As of January 31, there were 1,073 different snowfall records set across the country at various times
• The meteorological winter, beginning December 1 and ending March 1, marked Chicago's coldest winter in 30 years

As for the latest results from retail, industry sales in January fell 0.4 percent from December 2013, according to the Department of Commerce, led by a drop in auto sales and in categories like clothing, furniture stores and restaurants, sectors largely depending on foot traffic.  Seasonal hiring in February showed retailers took a more cautious approach to staffing their stores during the brutally cold month.

But for some retailers it hasn't been bad news:

• Ace Hardware has reported it is having its best winter in more than a decade thanks to increased sales of snowblowers and shovels
• Maine-based retailer L.L. Bean has sold out of its famous waterproof boots
• Sales for company Delivery.com are up 30 percent compared with last year as more people looked for ways to get their laundry, dry cleaning and grocery shopping done without leaving home
• Carmex, maker of their namesake cult-favorite lip balm, says its sales are up 9 percent over the past eight to ten weeks
• Pawz Dog Boots, which makes fun, colorful booties for dogs that protect them from salt and snow, says sales have more than doubled

Looking ahead, it's too soon to say if NRF's outlook for 2014 needs to be adjusted based on recent sales reports; the impact from the severe weather could have just been a blip on the radar, so to speak.  When the ground finally thaws and consumers can start enjoying spring-like weather, we will re-evaluate consumer spending.  Until then, we can only hope that winter is done having its fun with us.

Source: National Retail Federation

NRF Unveils 2014 Economic Forecast

February 6, 2014

Retail industry sales (which exclude automobile, gas stations, and restaurants) will increase 4.1% in 2014, up from the preliminary 3.7% growth seen in 2013, according to the National Retail Federation.  The association's 2014 economic forecast calls for online sales to grow between 9% and 12%.

A number of factors contributed to NRF's 2014 economic forecast, including:

• Economic Growth is expected to be above its long-term historical average.  Early estimates for growth in the economy as measured by real GDP could fall between 2.6% and 3%, a noticable improvement from the estimated 1.9% rate for 2013, and the fastest pace in the past three years.
• The labor market is expected to continue its modest recovery averaging approximately 185,000 jobs per month, helping decrease unemployment to near 6.5% or lower by the end of 2014.
• Inflation as measured by the CPI is predicted to inch higher to as much as 1.7% in 2014.
• The housing sector is expected to continue to improve in 2014, and stronger household and business confidence should spur more consumer spending overall.

"The economy remains susceptible to buffets as we are already witnessing in the new year, thanks to harsh winter weather, domestic and global financial issues," said NRF chief economist Jack Kleinhenz.  "While we are careful not to ignore the challenges, we are optimistic and hopeful that future disruptions will be limited, allowing employment and business investment to grow all the while giving retailers and their customers the confidence in the economy they need."

Source: Retailing Today

Demand Driven Planning in 2013

The availability of retail point of sale data over the past several years has created the opportunity for vendors to gain a detailed understanding of consumer demand at the retail point of sale.  Actual consumer demand at the retail point of sale presents a more accurate and timely picture of how your SKU’s are selling than retailer forecast advice or even retail purchase orders.  So why don’t all vendors collect EDI 852 or retail POS data from their customers and use it for creating forecasts and managing sales?  There seem to be several myths holding vendors back….

Myth #1: Collecting and analyzing EDI 852 / retail POS data is expensive and complex.  In a few limited cases like Home Depot and Menards it is true that the simple process of collecting the data has some expense.  Home Depot EDI 852 for example must be collected using a VAN so there are data transmission charges.  Menards charges a vendor to purchase a RSA SecurID.   But most retailers make EDI 852 or retail POS data available for free and even when there is a fee the benefits exceed the expenses.   Extracting the data, matching to item catalog details and store details does require some expertise but there are many SaaS applications now like Accelerated Analytics which will outsource the technical requirements for an affordable monthly fee.  By monitoring the consumer demand and inventory on hand at a SKU / store level of detail a vendor can proactively work with the retail replenishment manager to avoid out of stocks.  Every sale you get that would have been lost due to an empty shelf is returning value and paying for the expense of collecting and using the EDI 852 data.  How many lost sales do you need to recover a monthly data management fee that is typically less than $2,000?   At a chain like Home Depot with roughly 1900 stores in the USA the answer is not very many.

Myth #2:  My buyer won’t accept replenishment recommendations.  We hear this all the time – “I realize I could probably increase my in stock rate using EDI 852 / POS data but my retail customer uses automated replenishment or has a fixed open to buy plan so my recommendations fall on deaf ears”.  Several things are at work with this myth.  First, most vendors are operating on an assumption that if they talked to their buyer, they would discover is inaccurate.  I’ve talked to buyers at many retailers and I get a consistent answer – if the vendor can quantify the problem and provide an accurate order recommendation I will take it into consideration.  Second, the vendor has to demonstrate a competency in using the data for basic tasks like sales monitoring before they try to recommend orders.  I’ve seen countless examples of a vendor providing sales reporting and value to a buyer who then gains confidence the vendor can get the demand forecast right.  Finally, you have to start off slow.  Start with your highest turn products at your A volume stores and calculate the lost dollars sold for an 8 week period.  Then go to your buyer with a summary of your findings and actions to improve in stock and quantify the sales opportunity for both of you.  Make conservative recommendations to increase the WOS by one week so you gain back some sales but avoid loading the store with inventory and dropping your GMROI.  They have the same goal as you – to sell more product!

Every vendor that sells a product through a retail store should invest into analyzing retail point of sale data and using it for creating detailed action plans.  The data acquisition and reporting costs are very low when you consider them as a percentage of your retail sales and the upside benefits of increased sales, better assortment planning, and optimal inventory on hand are huge by comparison.  Let’s make 2013 the year that all vendors make the investment.