Friday, July 17, 2015

Category Management Series: Lean retailing and Inventory Management

Another blog post about lean retailing, inspired by an article that we have already discussed previously in this blog. 

The purpose of this article is to show you how by limiting the product range you could obviously lower your cost of good sold, but also increase customers satisfaction. Indeed, as the article outlines:

In the retail customers' demand is elastic. Retailers need to adapt inventory movements to customer demand. Basically, the concept of lean retailing is to give quick response to fluctuations in demand rather than holding large stocks.

Here is an interesting chart that shows how inventory management could help rise the profits of one retailer. Between the best and the worst scenarii you could lift up profitability by 6%.

Inventory should always been seen as an asset, but a complex product range will have a deep impact on the way you perceive one category profitability.