Inventory insights

With better visibility into stock, retailers can sell more products in less time.

Paul Demery

Founded in 1875, Merz Apothecary, a Chicago retailer of health and beauty products, is known for selling unusual products in its two boutiques and its e-commerce site Smallflower.com.

But the market for the eclectic collection of products at the shop has shifted over the years. Although a popular stop for Chicago tour buses, the retailer can't rely as it once did on a local following of European immigrants seeking old-world herbal medicines. It also faces stiff competition from national pharmacy chains. The retailer has addressed the challenge by using the web to build a base of customers far beyond Chicago.

But until Merz Apothecary deployed new technology a couple years ago that lets it see where its products are and what's available to fulfill orders, it struggled with a common e-retail challenge: If a merchant can't immediately provide the products featured in marketing or merchandising displays, or at least say how long delivery will take on back order, shoppers will buy elsewhere.

Now with a more effective inventory management system from Celerant Technology Corp., Merz enables its employees and customers to see what's immediately available to online and in-store shoppers, what it can fulfill from its stores and warehouse, and what goods are expected soon.

The new technology has helped increase sales from repeat customers while producing positive feedback from shoppers, says president Anthony Qaiyum. And while store sales have been growing at up to 10% in recent years, web sales have been increasing 20% or more, he says.

Knowing in real time where a retailer's inventory exists—whether it's in distribution centers, stores, outsourced fulfillment centers or at drop shippers—is crucial for enabling a merchant to quickly and efficiently fulfill orders and replenish inventory, keep customers happy and build sales. Realizing that visibility, however, requires retailers to share data among multiple systems—including their online order management, merchandise management, inventory management, and, if they're a retail chain, store point-of-sale system—so that as new merchandise arrives and as sales deplete stocks, merchants can see what's available, which products need reordering and which need to be moved through promotions.

That can be a tall order. Research and advisory firm Retail Systems Research LLC found in a study earlier this year that 65% of retailers with annual sales growth 3% above the industry average had built cross-company inventory visibility. When it asked retailers to rank technologies as "very valuable," 84% of respondents cited the ability to view all available inventory. "The ability to commit a product to sell anywhere, and at any time, is dependent on 360-degree inventory visibility," RSR managing partner Nikki Baird says.

At Loehmann's Inc., inventory visibility has helped online sales surge since the retail chain launched its first e-commerce site in November 2011, chief operating officer Bill Thayer says. In the site's first fiscal year, which ran through the end of January 2013, Loehmanns.com posted $11 million in sales, and Thayer says it's on track to hit $17 million in the current fiscal year.

The retailer of off-price fashion apparel and accessories makes available up to 150 new products a day in its stores and online, Thayer says, and it can only sell them on the web if its inventory management system keeps up.

Loehmann's launched its e-commerce site on the Internet-hosted ShopVisible technology platform. Loehmann's connects the ShopVisible platform to several applications including its in-house inventory database, its store point-of-sale system from Millennium Retail Solutions Inc., its merchandise planning system from MID Retail Inc. and its customer relationship management system from SHC Direct LLC.

The new setup enables Loehmann's to show accurate availability of inventory on its web site and in its call center. As sales transactions occur online, through the store POS system or through the call center, and when new products are added by the retailer's buyers to its merchandise planning system, the overall system updates inventory availability to show accurate product listings on Loehmanns.com and through its call center.

The system's ability to show real-time updates of available stock pays off particularly well when Loehmann's realizes it has extra stock that it wants to move quickly in a special promotion. That happened last spring during the peak wedding season. "In a one-week bridal sale, we sold 71 bridal gowns at $500 each," Thayer says.

Loehmann's plans to also use the ShopVisible system to view available store inventory to eventually start fulfilling some online orders from its 40 stores. In addition, it's also considering extending inventory visibility through ShopVisible to what's available from drop shippers. "We want to make sure the opportunity is there for the customer to see where inventory is in stores, distribution centers, suppliers, and how long it will take for delivery," Thayer says.

The cost to deploy ShopVisibile can vary widely based on a retailer's size, number of product SKUs and number of integrations with other retail systems, but implementation typically runs from "high five figures to well into six figures," says ShopVisible CEO Sean Cook. In addition, clients pay a monthly fee that ranges based on the scope of each retailer's deployment, Cook says, declining to mention specific fee levels. He adds that ShopVisible serves companies as small as $1 million and as high as several hundred million in annual sales.

To get a better view of inventory levels across its channels, home furnishings retailer Hanover Direct Inc. is using a new system of managing customers' orders and inventory as part of larger Internet-hosted business operating software suite from NetSuite Inc. That software is helping keep È È the retailer on track to hit double-digit increases in sales this year, says Jeff Rosenholtz, chief information officer.

NetSuite's OneWorld enterprise resource planning system includes software applications for inventory management, e-commerce order management, call center operations and customer relationship management, among others. The new technology platform, which Hanover finished deploying in June for its four brands—The Company Store, Company Kids, Scandia and Undergear—integrates with the Demandware e-commerce platform on which each brand operates its own retail web site. Now the retailer can see available inventory across multiple distribution centers as sales occur across its web sites and call center, which enables it to replenish goods running low and to keep marketing campaigns in sync with available inventory, says David Hirsch, Hanover's director of e-commerce.

The real-time inventory updates, Hirsch says, enable Hanover to market products that are available and that match customer demand as noted by the retailer's analytics on shopping behavior. "These programs have made our product marketing more relevant and produced a better overall customer experience," Hirsch says.

When Hanover sees that inventory is building up for down comforters sold by The Company Store, for example, it may decide to move that merchandise through targeted marketing campaigns designed with information on past sales transactions and customer data compiled in its NetSuite software suite. And as it watches inventory levels through the campaign, it may decide to adjust promotional deals, such as by further lowering prices or offering free shipping if it sees the comforters aren't selling fast enough. "This allows us to determine the exact promotion we need on exact merchandise, and much faster than we could before NetSuite," Hirsch says.

Hanover plans to replace the legacy point-of-sale system in its five stores with NetSuite's Retail Anywhere POS system. That will enable the retailer to also view all store inventories in real time from a central location so that it can quickly plan replenishment and promotional campaigns to keep inventory at optimal levels, Rosenholtz says.

The starting price for NetSuite OneWorld, which is provided in a software-as-a-service model, is $1,999 a month for the mid-market edition for mid-size companies, NetSuite says.

Merz Apothecary had similar goals when it began deploying web-based technology from Celerant in 2009, starting with inventory management, followed by a new store point-of-sale system and a new e-commerce site. The system also processes purchase orders that Merz places with its suppliers, providing immediate electronic updates on what has arrived and what's still on order.

Now, when the stock of a hot item grows thin, Merz can see what inventory is available for fulfillment in its warehouse as well as in its stores and also place reorders, Qaiyum says.

The Celerant system also shows what inventory is on the way from suppliers so that the retailer's web site, store employees and customer service reps can tell customers when they can expect to receive currently out-of-stock items, such as handmade Dovo razors imported from Germany, Qaiyum says. "If I can move $200 Dovo razors, that's great for my business," he says. The Celerant software typically starts at about $12,000 and can be customized at additional cost.

Systems that show the what and where of available inventory are giving retailers like Merz an edge in selling products and serving customers, instead of letting product sit in warehouses and customers slip away to competitors.