Study Finds Leading Retailers InTune with Consumer Needs 

According to a report released today by Retail Systems Research (RSR) in partnership with the Retail Industry leaders Association (RILA), leading retailers have excelled in meeting consumer needs through greater investment in their inventory management practices.

The report reveals that winning retailers understand the value of several significant investments in managing their inventory. Effectively forecasting consumer trends and delivering to shoppers the inventory reflected in those trends has been a valuable strategy for winning retailers. Additionally, localizing goods ensures that retailers stock their shelves with the local and regional products that consumers want. Communicating these strategies not just with supply chiefs, but with senior merchandising and store operations executives ensures that these strategies are adopted across the entire operation. Through these strategies winning retailers are better able to anticipate consumer needs, tailor their inventory to meet demand, decrease excess inventory, and sell more merchandise in today’s multi-channel consumer environment.

According to the report leading retailers have made “a bet that appears to have paid off.” In increasing their inventory but using localization, they have been able to sell more merchandise faster, and at a better margin than their peers.

“Understanding today’s consumer and meeting their immediate needs is a foremost priority for successful retailers,” said Casey Chroust, executive vice president of retail operations. “This report proves the actions leading retailers have taken to refine their inventory management processes have increased the value they are able to offer their customers.”

According to the study 29% of retail “winners” reported that over the last two years they have seen an increase in inventory. 64% also reported that over the last two years they have seen a gross margin increase. Finally, 55% reported seeing an inventory turn increase over the last two years.

Lagging retailers, on the other hand, who have not made these investments, and have fallen short in reinventing themselves to meet the existing economic climate, are being hit by inventory stagflation, battling out-of-stocks on fast-moving inventory and overstocks on slow-moving.

“Winning retailers understand that the days of ‘one size fits all’ retailing are gone and are taking steps to address 21st Century challenges. Winners associate better inventory management with the ability to localize the value offering for consumers and to support emerging cross‐channel shopping. These are customer‐focused motivations that underline the premium that Winners place on a customer focus,” said Brian Kilcourse, a Managing Partner at RSR.

Winners also recognize the importance of future technology investment across the whole of their operations, including warehouse and transportation management. They seek to fine-tune these applications to support greater localization and cross-channel selling and also see the value in investment of “emerging” technology such as Radio Frequency Identification (RFID). Retailers that have not made this level of investment in technology are facing greater challenges in managing inventory flow and replenishment.

The findings of this report are based on a survey of 80 retailers conducted May-July of 2009. The report was developed in partnership with RSR, a research company run by retailers for the retail industry.

The Retail Industry Leaders Association (RILA) promotes consumer choice and economic freedom through public policy and industry operational excellence. Its members include the largest and most successful retailers operating in the U.S.--which together provide millions of jobs and operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

To view the report visit http://www.retailsystemsresearch.com/_document/summary/970

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