An ongoing challenge in retail management continues to be effective distribution resource planning. Effective distribution resource planning includes setting inventory control parameters to calculate time-phased inventory requirements. When you allow a retailer to be completely responsible for your brand’s distribution resource planning you may run into instances where your product is not on the shelf or runs out of stock. Inevitably, if your product is not available to sell, it won’t. In the end, the retailer could de-list your product despite the fact that it was the retailer’s poor retail management that caused your product to be unavailable for consumer purchase.
Distribution resource planning is a science that involves many moving variables at both the beginning and end of a period. These variables include:
- on-hand inventory
- back ordered demand of a product
- required quantity of a product
- constrained quantity of a product
- recommended order quantity
In addition to distribution resource planning, a brand is also largely reliant on the retailer staff’s ability and training to understand the impact to a brand when their product is not on the shelf. If left up to them you could have a product that is in-stock but sitting in the back simply because the retailer’s staff has other priorities. It takes considerable effort to get a retailer to list your product and, even more, to keep it listed.
Good retail management is the key to a brand’s success at retail. Many brands work with merchandising companies to ease the burden of distribution resource planning and to ensure that the retailers are not the reason that their products are not on the shelf. Not only do merchandising companies assist with retail management and distribution resource planning, they also include teams that actually go to the retailer’s location to ensure products are in stock and on the shelf. If for some reason your stock is low before you anticipated that it would be, your assigned team will bring additional stock to the store before the retailer runs out. If your product is in stock and not on the shelf, they will ensure it gets there.
In the end, poor retail management and poor distribution resource planning causes the brand and the retailer to lose out on sales. This impacts customer retention greatly. The challenge for the brand is to manage what is already out of the door. If you have not taken measures to put controls in place, and the retailer is the reason that the product is not getting adequately stocked or is not on the shelf, the retailer has all of the control. You are at the retailer’s mercy and should the retailer de-list the product, you lose out.
Once the product makes its way in-store, a minimal investment on your behalf will ensure that your product is in stock and on the shelf. This will improve your product sales, which profits both the brand and the retailer. It will be a key reason that the retailer continues to offer your product.