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Does Inventory Management Determine Omni-Channel Success?

Woman in clothing store making selections

In the fashion industry, change happens quickly, and not just when it comes to clothing styles. Retailers must also adjust their inventory management in light of an evolving omni-channel landscape. 

For example, let’s say your retail chain sells V-neck sweaters in a variety of colors and sizes. A customer calls one of your stores asking if a red-colored V-neck sweater in size small is in stock. The request sounds simple, but the store’s retail management software only displays how many V-neck sweaters are in stock at the store. The system doesn’t have information about the available colors or sizes. The associate has to manually check a store shelf to check for a specific color and size. 

Your e-commerce website has the same issue. Although it displays the variety of colors and sizes of V-neck sweaters available for sale, your website isn’t able to inform you about what specific sizes and colors are in stock at the warehouse. Your website still needs to reference an inventory management database to display whether you have the product in stock. 

Some retailers try to get around this by issuing a different barcode for every color and size combination. But this inventory management method makes it difficult for setting the same price for a specific T-shirt style in all small, medium and large sizes. That approach requires an individual price on each item. Also, classifying items individually makes it difficult to analyze overall sales of the T-shirt style. 

So, what’s the best method to control the plethora of inventory data? That’s becoming more crucial in an omni-channel landscape. Customers expect a consistent experience across multiple shopping channels, and likewise, the way inventory is managed should meet the needs for every omni-channel function. In apparel retail, that means it would be helpful to know the quantity, colors and sizes of shirts to be able to manage inventory more effectively across multiple channels. 

That’s when inventory management by product variants comes in. Here’s how it works: Each product item has a variant. So, for an item like T-shirts, it has variants of small, medium and large sizes. Managing your inventory with product variants treats the various sizes and colors of a T-shirt as one product. 

Let’s say you’re selling a T-shirt in six different sizes and in six different colors. That means you have 36 variants of the T-shirt. When you manage inventory according to product variants, you’re able to set different inventory requirements (such as replenishment, minimum stock on-hand, track individual sales, etc.) for each variant while still having the ability to conduct individual analysis for each product’s item level. 

This method works well with omni-channel retailing. For instance, a customer browsing your website wants to buy a red T-shirt in large from one of your store locations. Since you’re managing your inventory by product variant, your inventory management system is able to determine if a store location has a red T-shirt in large size in stock. 

Remember, the key is being able to integrate an inventory management system with your omni-channel platforms. You want a seamless interface of tracking what’s in the store and what’s available online. Otherwise, you could be creating a customer service issue by displaying inaccurate inventory availability. 

Another benefit to managing inventory by product variant is setting different prices for the same product. Using an omni-channel strategy, some retailers set the same price for a product sold at multiple store locations. However, if one of the stores is located next to a competitor’s store, it’s possible to change the price of that product at a specific store location without impacting the price at your other locations. 

Retailers also are able to set different prices for variants of the same product item. For example, your sales analysis might discover that boys’ blue corduroy pants are selling faster than brown corduroy pants. To increase sales of the brown pants, you could lower the price of those pants and keep the blue pants at the original price. 

The success of omni-channel retailing depends on having the right inventory management approach to support it. Inventory management affects pricing and sales, both of which ultimately determine the success of your retail chain. 

See firsthand how our solutions deliver retail agility and performance. Schedule a no-obligation free demo of ArcherPoint’s retail management solution.

Author: Wm. Matthew Street, Solutions Consultant/Retail Product Lead at ArcherPoint