Inventrak Blog

In tight times, tightening inventory is an absolute must. As you downsize your inventory whether through discounting or liquidation, it is critical that you carefully choose which products to keep on the shelves. In order to do this, certain information is essential, namely a list of your bestselling items. With this list you will be able to establish your core lines, or the most popular items in your store. Core lines are the products that keep your customers coming back and depending on the item can even help to establish brand or customer loyalty.

It is vital to keep these items in stock at all times. Few things are more frustrating to a customer than to walk into a favorite store to find that their favorite item is out of stock. Setting up an automatic reordering system so that you can always have these items on hand will help to ensure that you are properly stocking your inventory.

Customers are not very enthusiastic about trying new products, brands, or stores right now. When change comes, particularly bad change, people stick to what is safe and familiar. So: Don't underestimate the power of your core lines! These are items your customers are still willing and wanting to buy, so stock up!

I am generally supportive of taking new and creative approaches to things, but with the current economic climate, inventory is not one of them! If it isn't broken, don't fix it!

While browsing the blogosphere recently, I found Doug Fleener's article Are Your Staff Believers? that discusses various ways to turn your staff into, you guessed it, "Believers." The tips presented in this article are really hints on ways to buoy the enthusiasm and efficiency of your staff.

While certain employee data (such as employee productivity reports) may have helped you to recognize your most valuable employees, how can you make the most of those workers? Chances are that you've made some staff cutbacks in the past few months, so it's absolutely vital to have the most friendly, well-trained and enthusiastic labor force you can possibly assemble. Check out Doug's tips on making the most of your staff!

The ability to respond to customer requirements on a timely basis has always been a fundamental element of the marketing concept. However, nowhere is this pressure more evident than in markets governed by fashion.

Fashion products have the following characteristics:

• Short life cycles: The product is often ephemeral and is likely to be very short and seasonal.
• High volatility: Demand for these products is rarely stable or linear.
• Low predictability: Because of the volatility of demand it is extremely difficult to forecast with any accuracy even total demand during a period, let alone week-by-week or item-by-item demand.

The combined effect of these pressures clearly provides a challenge to fashion inventory management. Traditional ways of responding to customer demand have been forecast-based, with the resultant risk of over-stocked or under-stocked situations.

Quick response strategy takes a different route. Although it may pose manufacturing capacity problems, fashion retailers order as little as possible before the season. From day one, POS data is gathered, analyzed, and then used to understand demand preferences. Reordering decision is then guided by the continuing (daily or weekly) POS data.

This quick response approach can be better appreciated when applied to a particular situation such as global or offshore sourcing. When it comes to a global or offshore sourcing situation, the real cost for fashion retailers is more than so-called low cost of sourcing. Cost due to time to response and time for shipping should also be taken into consideration. Quick response strategy is the key here. It is not only effective for estimating the demand within a short period, but also helps to cut the costs due to time lag.

Let quick response be your fashion store's marketing approach, you will see the difference.

Generally, there are three data sources for retailers:

Transactions and Tenders - point of sale information. Access to basket contents and associated tenders is vital to the customer-centric data warehouse. By recording each transaction of a customer who signed up into the database, a retailer collects every detail about the historical buying habit of the customer.  Moreover, if an item is promoted, it is nearly impossible to understand the true effectiveness of a promotion unless it is possible to understand whether that item sold more, the impact of the promotion on the typical basket contents and who responded to the promotion. Recording customer information to transactions and their line items constitute the basics. 

Call Center, Surveys, Internet Postings - real customer feedback. Call center data contains notes fields where customer service representatives can document the qualitative nature of calls and richer content regarding how often customers call, their moods and other information that can hint at systemic problems that make customers unhappy. Along with survey data, this is "trusted" data, meaning that there is some fidelity to the relevance of the source and that is from actual customers or prospects. Internet feedback, now much more common, can be a way to augment these data sources. It is not quite as "trusted," because of the anonymous nature of the Internet, but can still be influential in a customer's perception of or reaction to a retail brand and shopping experience. 

Loyalty Accounts -feedbacks from loyalty program such as gift registries. These data are obviously very helpful in attribution of characteristics to these customers.

These are the three general sources to obtain data for customer-centric database.  It is true that there are more sources, for examples, retailers can study the characteristics of a selling geography from the Census Bureau and estimate the customer behavior in the region.  However, retailers can directly communicate with customers at these three touch points other than through a third party.  Data from these resources enable retailers to build a reliable customer-centric database with accuracy.

For consumers, the price of a product is and will continue to be one of the main factors influencing a customer's decision to buy.

In the past, pricing decisions were often based on instinct and a few key figures, such as the goods sold and the profit margin achieved for all stores. Today, retailers have far more sophisticated tools and can even analyze how price changes affect the buying behavior of individual customers. On the whole, pricing is becoming more analytical.

By analyzing the sensitivity of different customers, retailers are able to charge customers different prices and improve their profitability.

Generally, the sensitivity of customers to price can be analyzed by their location and their own buying habits.

1. Regional Price Differences

While many retailers still charge the same price for the one item in all their stores, there is a trend towards charging different prices in different areas based on regional criteria. The effect of changing a price differs from region to region, even in different parts of the same town.

Retailers are now beginning to evaluate in greater detail the price sensitivity of customers in different areas. The price sensitivity of a store's customers is a result of the spending power in the area of the store, the values attached to the product and the amount of competition in the area.

2. Personal Price Differences

In addition to regional price differences, modern technology makes it possible for retailers to set different prices for different people. This may seem rather unusual at first, but is common practice even today in many companies. Numerous pricing methods are targeted at specific groups of customers in particular .

Some common pricing policies for customers are:

• Coupons: These are in widespread use throughout the US and are sent to customers in brochures or email. They entitle only the holder to get discount on certain items.
• Personalized Coupons: With the information technology, retailers are now able to create their customer database. Personalized coupons are increasingly being offered to the signed-up customers by direct mail, email or cell phone message. These special offers are based on the customers' past buying habit.
• Discount for signed-up customers: In addition to the coupons given to account signed-up customers through direct mails or emails, discounts are commonly granted on specific products to these registered customers.
• Loyalty bonuses: Loyalty bonuses are also commonly granted to certain registered customers. The bonus programs are based on minimum sales or on collecting points that can then be cashed in for price reductions or free gifts.

As a result of all these activities, it is often the case in many countries, such as the US, that the cost of the one basket of goods can differ considerably from customer to customer. Retailers are thus faced with the problem of processing this correctly at the point of sale and also of making appropriate analysis.

The future will see retailers striving for a more intelligent and diverse approach to price management that takes into account the emotional requirements of their customers.

Retailers are recognizing that customer loyalty cannot only be achieved in the long run by aggressively pricing their whole assortment but also by developing intelligent pricing policies targeted at specific customer groups.

There is a clear trend among retailers to take a more professional approach to price management, a process that is considered of extreme strategic importance. The strategic aspect of pricing policies is also becoming more important.

Strategic pricing first requires the retailer to define the basic strategy, especially at merchandise category level, as different approaches (to increase frequency or profits or create a certain image, for example) may require totally different prices.

The retailer then has to analyze systematically the effects of the pricing strategy to determine whether the pricing policies reach the goal.

For retailers, promotions are now being planned and analyzed less on instinct and more on the basis of the knowledge acquired on price sensitivity, target groups and their behavior, and so on.  Choose the right IT tools for your strategic price management, and you will see the difference.

With the ongoing economic crisis, strong customer relationships have gone from playing an incredibly important role in the success of retailers to playing an absolutely vital one.

Consumer confidence is at the lowest point it has been in years. In September, retail sales fell 1.2%, the deepest drop they had experienced in over three years. So how do you keep customers buying at your location when they could easily be spending their money elsewhere, or even worse, not spending it at all?

Welcome to Customer Evangelism 101. The key to keeping up sales during rough times as these is not to focus on luring more fresh customers into the store, but rather on keeping your satisfied customers loyal and willing & waiting to return.

Think about it. Customers are less likely to take a chance with a new company or product when money and resources are scarce. The key is to nurture previously established customer relationships, keeping customers coming back for the great product and service they've come to expect from your company. While you acquire the tools to keep these already existing relationships healthy, you'll be learning the skills to "court" other, new customers and keep THEM coming back as well!

But what do you need to do, you ask?

Most simply put:

Know Thy Customer!

If there is one thing that screams "Ineffective!" in the world of retail, it is a company that does not even know its customers. Your customers are assets to your company-treating them as anything but would be an unwise decision. A common complaint of unhappy customers is the fact that the company that upset them has no idea who that customer is. A single view of the customer is unavailable- The company does not follow that customer across various databases (such as catalogs, websites, stores, etc.).

This often means that the customer is forced to supply the vendor with personal information multiple times, making them feel miniscule and forgotten. REMEMBER THAT YOUR CUSTOMERS ARE ASSETS TO YOUR BUSINESS. Would you want to make a potential investor feel meaningless and overlooked? Gaining your customers loyalty and respect will help your business to prosper.

You may be wondering, ‘How can I possibly keep track of so many customers?' InvenTrak's answer is through Customer Grouping, (part of our Customer Experience Optimization package) which gives retailers the ability to categorize customers by analytics (such as revenue generated or items purchased), or by groups the retailers themselves create (such as Season Ticket Holders or Customers from Kalamazoo, Michigan). These choices allow you to follow customers based on hard numbers, (useful for functions like designating VIP Status to a customer) or follow them based on any detail a merchant would like to keep an eye on, like Customers Who Buy Green Shirts (the merchants can hopefully get more creative than that). Regardless of the type of group, Customer Grouping allows vendors to better understand and serve their customers as both valuable assets and real people.

That kind of unique bond between retailer and customer is far more valuable than any marketing scheme or annual sale could ever hope to be.

What are you doing to keep your customers happy and coming back during these difficult economic times?

The latest NFIB (National Federation of Independent Business) Economic report shows that "decreasing sales" is now the No.1 concern for small businesses. A recent LinkedIn community discussion recommended "focusing on your existing customers" as the top measure for dealing with economic downturn . How would you best work with your customers so they will keep their business with you and ride out this storm together?

Bill Dunkelberg is the Chief Economist at NFIB and a featured speaker at the Weather the Economy Forum, a series of webinars dedicated to helping small and mid-sized businesses survive and thrive in a tough economy.

Answer by Eric Kirk; Director of Marketing, Inventrak
Great question Bill! This is not quite the answer to the question you posed, as it does not directly deal with what we as a company are doing, but rather about tools we provide for our clients to maximize the relationships they have with their customers. As a POS/Inventory SaaS provider in the retail space, we have placed a lot of emphasis in the last few months in providing tools for Customer Experience Optimization "CEO".

Retailers in general, and particularly independent retailers, really need to get their hands around understanding their customer base, knowing their customers and understanding the true value of these relationships. With resources being scarce just as it is critical to ensure you have the correct lines and inventory mix on the floor; it is critical that there is a transparent process for management and staff to "value" the customer relationships.
I am reminded of a story about a retailer who actively marketed to their entire customer base, and one day received a note from one of their customers that essentially said, "She was a loyal customer, she shopped at the store regularly but it frustrated her that the they knew nothing about her". She concluded by saying that if the retailer cared about her as they claimed to do in all the email, they would get to know her. In this market, it is more important than ever to really get to know your customer base.

Our "CEO" process includes real time email alerts to store managers advising them of purchases made by customers who meet management-defined metrics on profitability, transactions or sales volumes, allowing store management to follow up with key customer relationships. Identifying customer buying patterns and trends are also part of the standard process, driving customer level promotions based on buying trends and inventory levels are scheduled for delivery in the next few months.

Short answer to what do you do to keep your customers happy and coming back...really get to know them and what they like about you, and optimize their experiences with you.