These days, with the internet at their fingertips, customers tend to know exactly what they want.
Imagine a customer walks into your store with a specific item in mind. Let's say it’s a mid-century modern sectional sofa with emerald green performance velvet upholstery, brass-capped walnut legs, exactly 2650mm wide to fit their awkwardly sized living room.
This customer has done their research, and they're ready to buy—as long as your store has exactly what they want. But if it's not on your showroom floor, that customer will walk out empty-handed, and you've just lost a sale—and potentially a loyal customer.
This scenario is not new. It’s a tale as old as retail itself, but nowadays, it's becoming more and more common and costly for retailers to manage. These days, competition is at an all-time high, and profit margins are shrinking. Customers in the internet age expect instant gratification, and they count on retailers to make it happen. As a result, retailers are embracing flexible inventory, which lets them create endless aisles for their customers—meaning they never lose a sale.
And it’s paying off. Merchants using Retail Express for flexible inventory have seen a 5% increase in sales and a 6% increase in revenue.
Say goodbye to stockouts
We’ve previously discussed the benefits of the transparent inventory and flexible fulfilment approach, but in today’s economic climate, it’s essential. Year-on-year retail spending growth decreased from 9.3% to 2.0% in 2023, and retailers are under immense pressure to manage demand and prevent stockouts, despite having smaller budgets. The ability to access and sell inventory across the supply chain from anywhere in their network is key to achieving this.
What’s worse, the effect of stockouts lingers long beyond a lost sale or two. It can have major implications for your brand and future sales, creating a ripple effect that can detrimentally impact your bottom line.
Most customers today start their journey online. They’re most often researching the products they’re interested in before they ever visit a store. And once they’ve made the effort to visit a shop and the item they want is out of stock, it’s more than an inconvenience—it’s unacceptable. Over one third of shoppers say they have ditched an entire in-store purchase due to an item they want being out of stock. We’re in an era where same-day delivery is the norm, so availability is expected.
It’s even more complex in today’s omnichannel retail environment. It’s an impossible choice for many retailers: carry too much stock, and it’s detrimental to their margins. Carry too little, and they not only risk losing sales, but loyal customers.
Multichannel retailers have inventory everywhere: in stores, online, in warehouses, and in transit—and capturing all of this data to have real-time visibility into stock can be a nightmare. As a result, many unwittingly turn away customers, because even if the stock is readily available somewhere in the supply chain, no one can see it.
Without this visibility, retailers have been caught in an endless cycle of understock and overstock—they’re damned if they do and damned if they don’t. Most merchants choose overstock as the lesser evil, with mitigation strategies like steep markdowns and offloading to discount retailers. But even these strategies add costs. It’s simply not efficient or sustainable for retailers to manage excessive stock everywhere, all the time.
Embracing flexible inventory creates endless aisles
At its core, flexible inventory integrates and reveals inventory and fulfilment data across your entire network and supply chain. It connects each and every point where your inventory exists—from store shelves to warehouses to incoming stock containers.
Flexible inventory takes all inventory data and makes it available to customers wherever they are. The end result is “endless aisles,” meaning customers know that when they shop with you, they’ll have some way of getting exactly what they need every time, resulting in more sales and revenue for you.
Merchants using Retail Express for flexible inventory have seen a 5% increase in sales and a 6% increase in revenue.
How flexible inventory works
With flexible inventory, retailers get holistic insights into their entire supply chain. You can see stock levels in every location: stores, warehouses, online fulfilment centres, and even in-transit inventory—in real time. All data can be accessible to everyone, from the ecommerce managers who plan digital promotions to the store associates who help customers on the sales floor.
There’s no more rigid demand planning using standard replenishment cycles. Instead, inventory levels across the entire supply chain update dynamically and automatically based on demand. This level of accuracy is particularly helpful during high-volume sales periods like Black Friday and Cyber Monday, when inventory levels may change by the second.
True multichannel retail can only exist when all systems—in-store POS systems, ecommerce platforms, warehouse management systems, and transit tracking—are integrated and work together seamlessly. With flexible inventory, sales associates see instant availability data and online stock is updated in real time—whether the item is in the stockroom, at another store location, or in a warehouse.
This means regardless of where they're shopping, customers’ orders can be fulfilled from any point in your inventory:
- In-store stock
- Other brick-and-mortar locations
- Warehouses
- Connected suppliers
- Incoming deliveries
And there are a variety of ways for them to get what they need: They can easily take any item away the same day, click-and-collect at a nearby store, reserve an item for pickup, or have an item delivered directly from the store.
"Being able to sell from other stores has been absolutely fantastic. We're not big enough to have every size and every colour in every store, but now, with Retail Express, we can capture those sales on the spot rather than sending the customer away."
- Fashion Boutique Ecommerce Manager and Retail Express customer
Flexible inventory and fulfilment are key to delivering a multichannel experience that keeps customers coming back, and they’re transforming the shopping experience for your customers. Here’s how:
Selling in-store stock online: Even if you have stockouts in your warehouse(s), flexible inventory still allows you to make online sales using store inventory. The ability to fulfil online orders from store stock is more efficient in two ways: First, if a shopper is geographically closer to a store than a warehouse, shipping is faster, more efficient, and less expensive. Second, because stock is updated dynamically with flexible inventory and replenishment becomes more accurate, you don’t need to keep excess stock in warehouses.
Fulfilling online orders in store: Accessing real-time inventory levels across channels makes it easy for customers to check store stock and “click and collect.” Flexible inventory also makes it easy to offer various fulfilment options like store pickup and local delivery—which is particularly convenient for large items like furniture. Showing accurate stock levels online also drives foot traffic to in-store locations
Expanding your range through supplier integration: Whether customers are shopping online or in store, having a full view of your supply chain lets you fulfil orders directly from suppliers, meaning you can instantaneously expand your product offerings without any of the merchandising effort or depleting or adding to your stock.
How flexible inventory solves five key retail challenges
Lost sales and customer churn
When customers can’t find what they’re looking for, they’ll find it somewhere else. Giving sales associates full access to stock information across the supply chain means they can make a sale on the spot and arrange for immediate delivery or pickup.
Also, customers today expect to be able to check online to see if an item is in stock in the stores near them. If they’re forced to choose between a store with its stock displayed online and one that doesn’t, they’ll choose the former. With flexible inventory, you can be sure your in-stock information is always accurate. This increases the likelihood of a sale and builds your brand’s reputation with customers.
Excess inventory and demand planning
Flexible inventory allows you to reduce your reliance on safety stock to mitigate stockouts.
It’s recommended that retailers keep at least 50% of lead-time demand in their safety stock at all times. Let’s break down how expensive this can get:
Take the same furniture retailer as before. A certain armchair that costs $1,200 just went viral on social media, and they’re selling about five of them per day. At the peak of the craze, they sold twelve in one day. It typically takes about two weeks to restock the chair and at most, it took 30. This is how they would calculate their safety stock:
(Maximum daily sales x Maximum lead time) - (Average daily sales x Average lead time)
(12 x 30) - (5 x 14)
Safety stock = 290
For a small retail store, 290 units of a large product is not only costly to have in stock in the first place, but can also be incredibly expensive to keep in a warehouse at all times. This number only grows and becomes less manageable when you factor in more store locations and online purchases.
Because of dynamic stock allocation, you can have more of the right stock where customers are most likely to buy it. Flexible inventory treats your entire supply chain as one big inventory pool, so you can plan distribution based on actual demand patterns. Stores can keep less stock without sacrificing customer needs. And, because all of the data is in one place, demand forecasting only becomes more and more accurate over time.
"The minimum stock level replenishment from our head office has been brilliant. With demand forecasting and a variety of other tools, Retail Express helps keep stock flowing smoothly between the warehouse, stores, and online with minimal waste."
- Fashion Boutique Ecommerce Manager and Retail Express customer
Store inefficiency and customer service issues
The whole point of having an in-store staff is to help customers find what they’re looking for and create a delightful experience. If store associates don’t have access to accurate inventory data or they’re busy managing the inventory they do have, their job becomes a lot harder. When they’re dealing with manual stock counts, slow inter-store transfers, and replenishing stock, they don’t have the time or resources they need to create an excellent customer experience.
Flexible inventory systems automate these tasks. This means your store associates have access to up-to-date stock levels in real time, data-driven replenishment. and streamlined transfers between locations. This way, they can focus on serving customers by giving personalised recommendations and creating a smooth, pleasant in-store shopping experience. Not only that, but they have inventory data they know they can rely on, so they don’t run the risk of disappointing customers.
Flexible inventory is a surefire way to set your in-store associates to do their part in creating satisfaction and building loyalty among shoppers.
What this means for retailers
With flexible inventory, you can eliminate stockouts and minimise reliance on overstock. Associates can fulfil orders from anywhere inventory exists in their network—meaning you never have to turn a customer away empty-handed.
In doing all of this, operational costs go way down. You can reduce your safety stock, meaning less overhead in procuring and storing items that may never even sell. And because inventory moves more efficiently between locations based on real-time demand, you’re also saving on shipping costs.
But most importantly, flexible inventory establishes reliability that builds trust with your customers. When people know they can find what they need, they’ll complete not only today’s purchase, but future ones as well. When enough of these customers become repeat purchasers, you build a reputation as a reliable brand with excellent customer service.
With flexible inventory, you’re not only overcoming the challenge of inventory management, but you’re transforming it into a competitive advantage.
Ready to eliminate stockouts? Book a Retail Express demo today and discover how flexible inventory can boost your sales by 5% or more.
