How size optimization helps retailers improve inventory productivity and profitability

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Shoe ShoppingAll of us in the retail and wholesale industry, regardless of role, are responsible for the same objectives: Increase customer satisfaction, inventory productivity, and profitability by way of localization and omni strategies. We've learned that our best strategies sometimes fall short; we spend significant effort analyzing, only to achieve marginal results.

Many of us have first-hand experience in size intensive businesses analyzing sales by size having developed size tools to maximize inventory investments.  My experience included a methodical approach very similar to that of the Retailers and Wholesales I have the pleasure to work with.

I learned that historical sales (even at regular price), are not a proxy for true size demand. When my company implemented software that allowed us to create size demand profiles at granular levels based on product, locations and time, it was a game changer. We'd never been able to get that granular view before, and getting it was a quick and efficient process that provided an incredible soft benefit, in addition to the financial benefit to the team.

We learned that our organization was actually purchasing the right amount of smaller sizes. This information provided incredible insights – and was vastly different than our previous ‘analysis.’  We couldn't understand why locations were requesting more smaller sizes when the overall turnover of those sizes were marginal at best, and were stunned to learn that the quantity of smaller sizes purchased was actually in line with size demand. That gave us the opportunity to better apply those units to the locations that had greater demand, while other locations didn't need the smaller sizes at all.

Another key learning was how ‘high was high’ with the larger sizes – not only in certain locations, but also for online sales.

Organizations spend significant time and energy analyzing and strategizing on fringe size offerings and calculating the appropriate buy quantity to meet fringe size demand. Many times the inventory levels are constrained and there's unfilled demand left on the table.

Many retailers now leverage omni strategies to maximize the productivity of their inventory investment and fulfill customer demand via ‘ship to store’ or ‘ship direct’ when demand exceeds inventory levels by size by location. ‘We will find your size and ship…’.  Well, at what cost is that to the retailer, and in our instant gratification society, how many customers are willing to wait?  How many customers choose to walk because their choice isn't available in their size where and when they want to purchase?

SAS provides the proven predictive analytics to drive improved size precision by way of understanding the impact inventory plays into size demand, how size demands differ by location, product hierarchy or attribution, and how size demands differ over time. SAS Size Optimization has been helping retailers and wholesalers meet and exceed customer satisfaction and financial targets.  Understanding the impact constrained inventory plays and the opportunity to redistribute sizes based on demand is how retailers and wholesalers are winning across all channels.

Imagine having a scorecard to provide these facts prior to placing your purchase orders! Business users don't need to be data scientists or PhDs to apply the analytics and experience the results. In fact, business knowledge is the key ingredient in achieving results!

Now’s the time to start planning, and sizing up for 2016 To learn more:

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About Author

Donna McGuckin

Principal Solutions Architect

Enjoying 20+ years in Retail Industry with both Specialty, Department Store, and Omni experience.

Domain Expertise includes Merchandising, Planning, Assortment, Allocation, Replenishment, Merchandise Operations, and Supply Chain Management.

Prior to joining SAS 2.5 years ago, was the Business Sponsor responsible for the implementing SAS Size Optimization including how to measure and communicate the value throughout the organization.

Experience as a SAS customer inspired me to become a part of the SAS team to support retail and wholesale customers solve business opportunities and bring swift value through the SAS Retail Analytics and Merchandise Intelligence Solutions.

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