Retailers have learned that, to best manage inventory surplus, a specific strategy must be developed, it is no longer enough to simply lower prices. This specific case, actually, is linked to the wider and more complex issue of profit protection.
We have already explored the issue a few months ago: the changed international context has led to unprecedented inventory levels. A recent analysis by McKinsey & Company on the American market confirms the situation. Among the macroeconomic trends, geopolitical issues and consumer opinions, the scenario becomes particularly challenging for Retailers. Current stock availability, in fact, widely exceeds demand.
Inflation and the subsequent increase in interest rates push consumers, for example, to behaving as follows:
Faced with such a complex situation, markdowns alone cannot represent an effective solution over the long run. Retailers must basically turn to more refined instruments and analyses.
The McKinsey study, firstly, recommends a more reasoned policy towards markdowns. The items to promote, the places/channels where to offer them and the best time to do so must be selected carefully. The extent of the discounts is also fundamental, to achieve one’s sales objectives while nonetheless maintaining attention to profit margins high.
At the same time, it is also important to increase the efficiency and effectiveness of the store’s operation. It is, in fact, necessary to massively reduce all those situations and behaviors which negatively affect profits: specifically, we are referring to cash and inventory differences. This takes us into the wider discussion of so-called Profit Protection in a network of retail stores. An authentic mix of “art” and “science”, concerning numerous aspects of business processes and requiring ad hoc technologies.
It is precisely in situations like these described above that Bizeta’s Retail Profit Protection solution comes into play. An instrument created to minimize losses, protect profits and maximize margins in the context of a network of retail stores, thanks to the identification of fraudulent commercial transactions, irregularities, abnormal behaviors and lack of compliance with procedures.
These are sophisticated algorithms of forensic analysis and evolved data-mining technologies which take shape in intuitive, but powerful and flexible tools. The ideal solution, therefore, to offer Retailers a complete view of the main causes of cash and inventory differences.
The commercial staff of Bizeta Retail Solutions is at your complete disposal to give you any information about our solutions.