SOURCE: Aberdeen Group

Aberdeen Group

July 08, 2010 11:30 ET

Leading Retailers Increasing Localized Inventory for Visibility and Accuracy

Shelf-Level Inventory Flow Alignment With Customer Purchase Behavior

BOSTON, MA--(Marketwire - July 8, 2010) - Between May and June 2010, Aberdeen, a Harte-Hanks Company (NYSE: HHS), surveyed 100 retail enterprises to determine the current state of inventory operations, and merchandising initiatives, and related performance.

According to the Aberdeen Group report, Inventory Visibility, Tracking, and Traceability: Meeting Customer Expectations on the Store Shelf, the foremost inventory-related pressure (selected by 41% of responding retailers as their top pressure) is "lost sales opportunities emanating from out-of-stock inventory" in stores and channels.

During a revival phase in the retail industry, the out-of-stock pressure is a deeply troubling sign when one considers that the next two pressures are related to "high inventory holding costs" and "excessive inventory in channels and warehouses." 

As a response to the business pressures related to topline sales and customer satisfaction losses associated with out-of-stocks, leading retailers are focusing on raising the bar in customer-focused areas. Best-in-Class are implementing a comprehensive inventory optimization strategy that takes into account shelf or item-level inventory flow that is related to customer purchase behavior. "Retailers such as Macy's, Lowe's, and Family Dollar are applying more localized and customer-driven inventory models that strive towards inventory accuracy and visibility down to the store shelf-level," says Sahir Anand, Director of the Retail Practice and Chief Author of the report.

The make-up of inventory solutions in retail needs to be looked at from two lenses. Firstly, there are systems that are primary to shelf-level inventory planning and execution. Inventory forecasting, order management systems, consumer-driven replenishment, and reporting tools are the primary systems/tools that are directly related to the core inventory functions such as forecasting, planning, demand-driven replenishment, inventory data analysis and reporting.

Secondly, associated collaborative approaches for shelf-level inventory optimization include vendor managed inventory (VMI) and collaborative planning forecasting replenishment system (CPFR), and radio frequency identification (RFID)-based approaches. All these approaches are focused on inventory accuracy, visibility, and better supply chain integration.

A complimentary copy of this report is made available due in part by the following underwriters: Tyco, Avery Dennison, Psion Teklogix, and 4R Systems. To obtain a complimentary copy of the report, visit: http://www.aberdeen.com/link/sponsor.asp?spid=30410182&cid=6380&camp=2

Visit Research.Aberdeen.com for additional access to complimentary Retail Research.

About Aberdeen Group, a Harte-Hanks Company

Aberdeen provides fact-based research and market intelligence that delivers demonstrable results. Having queried more than 30,000 companies in the past two years, Aberdeen is positioned to educate users to action: driving market awareness, creating demand, enabling sales, and delivering meaningful return-on-investment analysis. As the trusted advisor to the global technology markets, corporations turn to Aberdeen for insights that drive decisions.

As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-Hanks (Information - Opportunity - Insight - Engagement - Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen or call (617) 854-5200, or to learn more about Harte-Hanks, call (800) 456-9748.

© 2010 Aberdeen Group, Inc., a Harte-Hanks Company
451 D Street, Suite 710
Boston, Massachusetts 02210-1928
Telephone: (617) 854-5200
Fax: (617) 723-7897
www.aberdeen.com