Skip to content
Search AI Powered

Latest Stories

Forward Thinking

"Localization" of product assortments raises inventory and margins

Retailers that offer local and regional product assortments, promotions, and pricing appear to have found a winning strategy.

Retailers that offer local and regional product assortments, promotions, and pricing appear to have found a winning strategy. Although their inventory levels have grown marginally, primarily due to an increase in the number of stock-keeping units (SKUs), retailers engaged in this practice of "localization" have been able to sell more merchandise than their competitors—and at higher profit margins. That was one of the findings in the report Precision Inventory Management in the Age of Localization, which presented the results of research conducted by Retail Systems Research (RSR) in partnership with the Retail Industry Leaders Association (RILA.) The groups surveyed some 80 U.S., Canadian, and European retailers from May to July 2009.

Twenty-nine percent of the survey respondent companies that were designated as "winners" (as opposed to companies classified as "laggards") have seen increased inventory levels. Meanwhile, 64 percent have achieved higher gross margins, and 55 percent experienced higher inventory turnover rates. "Winners associate better inventory management with the ability to localize the value offering to consumers," said Brian Kilcourse, a managing partner at RSR.


The study found that food, drug, and convenience stores are under more pressure to meet local consumer demands than other types of retailers. Fifty percent of the food, drug, and convenience store respondents said they face strong consumer demand for a localized product assortment, compared to only 37 percent of department and specialty stores, 33 percent of discount stores, and 25 percent of mass retailers. Yet food, drug, and convenience stores may have the hardest time meeting that demand: 58 percent said their trading partners don't have the flexibility the retailers need in their supply chains.

To manage the complexities that come with localization, leading retailers are starting to place a high value on a single demandforecast and store-level inventory management system. They place less value on such applications as logistics dashboards and transportation management as tools for managing inventory while providing a mix of localized goods, products, and pricing.

Source: Precision Inventory Management In The Age Of Localization, RSR Research and RILA, August 2009

Recent

More Stories

person using AI at a laptop

Gartner: GenAI set to impact procurement processes

Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.

Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.

Keep ReadingShow less

Featured

A photo of brown paper packages tied up with shiny red ribbons.

SMEs hopeful ahead of holiday peak

Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.

That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.

Keep ReadingShow less
holiday shopping mall

Consumer sales kept ticking in October, NRF says

Retail sales grew solidly over the past two months, demonstrating households’ capacity to spend and the strength of the economy, according to a National Retail Federation (NRF) analysis of U.S. Census Bureau data.

Census data showed that overall retail sales in October were up 0.4% seasonally adjusted month over month and up 2.8% unadjusted year over year. That compared with increases of 0.8% month over month and 2% year over year in September.

Keep ReadingShow less
Mobile robots, drones move beyond the hype

Mobile robots, drones move beyond the hype

Supply chains are poised for accelerated adoption of mobile robots and drones as those technologies mature and companies focus on implementing artificial intelligence (AI) and automation across their logistics operations.

That’s according to data from Gartner’s Hype Cycle for Mobile Robots and Drones, released this week. The report shows that several mobile robotics technologies will mature over the next two to five years, and also identifies breakthrough and rising technologies set to have an impact further out.

Keep ReadingShow less
chart of sectors leasing warehouse space

3PLs claim growing share of large industrial leases, CBRE says

Third-party logistics (3PL) providers’ share of large real estate leases across the U.S. rose significantly through the third quarter of 2024 compared to the same time last year, as more retailers and wholesalers have been outsourcing their warehouse and distribution operations to 3PLs, according to a report from real estate firm CBRE.

Specifically, 3PLs’ share of bulk industrial leasing activity—covering leases of 100,000 square feet or more—rose to 34.1% through Q3 of this year from 30.6% through Q3 last year. By raw numbers, 3PLs have accounted for 498 bulk leases so far this year, up by 9% from the 457 at this time last year.

Keep ReadingShow less