Guest Column: Can A Defensive Inventory Strategy Co-Exist With High Shelf Availability?

By Prasad Putta, Vice President, Merchandise Visibility, Checkpoint Systems

Recent news headlines have raised concerns about the increase in numbers of so-called "zombie" stores, where customers find only empty shelves as a result of retailers' defensive inventory strategies. Because shoppers have curtailed purchases, retailers are ordering less inventory to avoid overstocks and markdowns. The commonly accepted belief attached to this strategy is that if sales pick up, retailers won't be able to replenish shelves quickly enough to ensure plentiful inventory is available for purchase.

It's true that shoppers have significantly reduced their buying, and retailers are ordering less inventory. But there is no reason why reduced inventory must lead to zombie stores if retailers have an effective merchandise visibility strategy in place.

Today more than ever, retailers need complete visibility from source to store to optimize their operations. Industry studies show that even in a healthy economic environment, retailers' inventory numbers are accurate only 35% to 45% of the time. As a result, retailers face margin-reducing pressures across a variety of fronts. Adding defensive inventory strategies into the mix only worsens the problem, as the margin of error for adequate on-shelf availability becomes very slim. Only with accurate insight into the movement and availability of merchandise, can retailers prevent out-ofstocks, avoid over-stocks and successfully satisfy customer demand.

RFID-based merchandise visibility enables retailers to gain valuable insights into their operations across the entire retail value chain – from manufacturing through distribution and retail stores – while offering real-time views into merchandise levels and operations. This high-resolution visibility improves instore operations, supports defensive inventory practices and ensures merchandise is available for purchase when customers come in to shop. It also enhances the customer shopping experience and leads to increased revenue and margin performance for the retailer.