With 2020 finally behind us, the future for retail is looking bright. Despite a global pandemic, total retail sales still performed well in 2020. The National Retail Federation (NRF) recently announced early findings show a 6.7 percent increase in retail sales from 2019 to $4.06 trillion, and they expect total retail sales to exceed $4.33 trillion in 2021. The BEA also reported consumer spending was up 2.4 percent already in January 2021, which is a great sign for overall economic growth.
While the future outlook is positive, it doesn’t change the past year. Some businesses were able to capture more sales than they otherwise would have in 2020 by ramping up online distribution channels. Unfortunately, that wasn’t the case for many. Regardless of where you fall on the spectrum, the reality is most businesses still missed out on revenue in 2020.
Here’s what you can do to regain lost revenues in your supply chain.
Regaining lost revenue starts by regaining lost customers and building your customer base back up. Consumers stop buying for a reason. It’s paramount for your business to know and understand why customers left. The main reason customers don’t buy is because they couldn’t find what they needed: either the items were not carried or out of stock. These are big challenges to overcome, especially when normal supply and demand patterns have been disrupted. Solving this problem will help regain customers and retain new ones.
The first step is understanding what products your customers want and ensuring those key items are in-stock. Next, you need to have accurate forecasts. It’s best to work with a solution provider that uses machine learning and AI to predict demand since it will be more accurate than relying on historical data alone. The final step is putting a plan in place to make sure you are able to consistently source and stock these valuable items in the right quantities. 4R’s solutions, for example, can account for actual demand patterns, inventory costs, margin, case pack size, lead times, and other supply chain parameters to determine the best inventory level of each SKU for your business.
Find Opportunities for New Products
Once you have the right inventory in place and you understand your customer demands better, you will begin to see sales increase. One way to push through plateaus for some SKUs is to try different supply chain scenarios with distribution channels or locations.
If you operate out of a physical space that is customer-facing, some products will inevitably sell better when placed in the right locations. Similarly, if your business consists of many locations, some items may see high sales in one area or region but not in another. If you are purely eCommerce, find new products that compliment your existing assortment or present current inventory in a different way on your site.
Instead of experimenting on your own, you can take a more sophisticated approach. Some supply chain solutions utilize advanced analytics and machine learning technology to help determine the best quantity and location for every item in your supply chain. This technology is the most accurate way to help you analyze the sales opportunities of every SKU.
Account for Demand Transference
After you have completed all the steps mentioned above, you may still miss out on revenue from a few of your customers. That’s because even the most advanced replenishment solutions can’t predict what every single customer will want. This is where understanding and accounting for demand transference comes into play.
Demand transference is a term to describe what happens in the event that a consumer’s first choice isn’t available. There are two main results:
- They buy a similar product instead
- No similar product is available, so they leave and search for it elsewhere
Obviously, businesses want to capture every sale possible. Making sure you have products with similar attributes is a great way to regain revenue. This means you should constantly be comparing products for similarities so that you can also stock inventory with comparable attributes. Information like this is hard to get without a good supply chain solution, but it is critical to have in place.
Start Regaining Revenue Now
Replenishment is a core function for so many of our customers, and it has been more challenging than ever this past year. 4R’s Replenishment and Allocation solutions can configure the most effective plan to regain revenue in your supply chain. While we’re hopeful for the future, regaining isn’t based on hope, but rather proven principles that have helped in the past and are helping our clients today.
We’ve had proprietary machine learning and AI algorithms before they were buzzwords. Let them go to work for you so you can start regaining more, now. Contact us today at firstname.lastname@example.org to learn more.