Allocation offers retailers the perfect opportunity to ensure that the items their consumers want to buy are available in the right store or channel, at the right time. At stake are sales, profit margins and customer loyalty. With a growing emphasis on customer demand, an unpredictable market and the availability of data that provides a granular view into exactly what customers are buying and where, retailers simply must get their allocations right from the start. Companies fighting for market share in today’s highly competitive retail landscape need to execute carefully laid merchandising and assortment plan with allocation strategies that are just as pensive. Investing in a modern allocation solution that takes the guesswork out of pushing inventory to the optimal retail store or sales channel has become increasingly important. In this article, we share the benefits of replacing spreadsheets and other processes with a modern allocation solution.
Use Demand to Drive Smarter Allocations
All too often, consumer demand for product choice, color and size take a backseat in the planning process. Retailers frequently put all of their focus and energy into planning assortments based on last year’s numbers. The consequence? A self-fulfilling prophecy in which product is allocated based on historical information – whether the data served the retailer well or not. Truly optimized allocations are driven by demand potential, rather than historical sales alone. Ultimately, companies that ignore signals of consumer choice pay the price with markdowns and lost sales. In order to combat this challenge, there is an opportunity to drive smarter allocations – with solutions that utilize demand curves for items based on attributes for comparable products or product categories can help retail organizations set the level of expected future sales, as well as minimize the risk involved in launching new products.
Make Allocation Management a Priority to Maintain Your Competitive Edge
It’s apparent that allocation is an important part of the overall retail process. Companies that make smart decisions when it comes to creating demand-driven, localized allocations, move from a push-to-pull strategy and hold some inventory back after their initial allocation will be better equipped to deal with today’s unpredictable consumer and ever-changing retail environment.