November 5, 2024
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Can In-Store Better Compete With Online Inventories?
Consumers are becoming increasingly frustrated not being able to find a product in store when it’s widely available online, according to AlixPartners’ 2024 Consumer Sentiment Index.
AlixPartners wrote in the study, “‘Right product, right place, right time’ echoes in every retail conference room, yet as retailers have expanded online assortments and marketplaces to attract new customers and traffic, it’s become more challenging to avoid frustrating shoppers when they can’t find their size or their desired item in-store.”
Across retailers, AlixPartners finds that in-store assortments are, on average, only about 9% as large as the online assortment. Among different sectors, mass retailers only offer 2% of their online SKU in store; department stores, 7%; jewelry, 12%; active, 16%; footwear, 19%, and specialty, 32%.
As an example of the challenges, AlixPartners said Macys.com has 24,000 women’s tops available online, but inside Macy’s largest store, the Herald Square flagship in New York City, only 2,500 women’s tops are available for customers to pick up. For Gap.com, 158 women’s tops and tees are available online, but only 50 are offered for pick-up in its Herald Square location.
AlixPartners wrote, “While retailers cannot afford [to] take on the inventory cost and risk of carrying this breadth of product in store, the bar is high to appear seamless. To do so, retailers must improve their ability to integrate advanced analytics and logistics to boost their efforts to both forecast and move products more effectively … and stop disappointing customers.”
When asked what they do when they find a product is not in stock in store, 36% of consumers order it online from the same retailer, 34% order it online from a different retailer, and 31% try to find it in-store from a different retailer.
While important across all sectors, finding an online product in-store is most important in higher-priced sectors, such as luxury, as well as jewelry, watches, and outdoor.
Looking at generations, having in-stock products in stores is most important to millennials and Gen X. A 2020 survey from Zebra Technologies found similar results, seeing 75% of millennials and 53% of Gen X report leaving a store without a purchase and buying online due to out-of-stocks, while only 26% of boomers do so.
Tablets or POS terminals promise to provide a way for in-store staff to order a product online to make up for an in-store out-of-stock. However, Zebra’s 2023 Global Shopper Study found that 80% of associates believe maintaining real-time visibility of out-of-stocks is a significant challenge, 77% believe shoppers are better connected to information than associates, and 61% have little time to help customers because they are doing other lower value tasks.
Providing in-store pickup to ensure items are available when a shopper arrives at the store can also help avoid out-of-stocks.
Additionally, online information about in-store inventory levels can help consumers avoid the disappointment of an in-store out-of-stock. Some stores, including Macy’s, show alternative in-store options online for products unavailable at the store level.
BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
John Hennessy
Retail and Brand Technology Tailor
Brett Wickard
CEO, FieldStack
Recent Discussions
Discussion Questions
Are retailers doing enough to provide “seamless” access to online inventories at the store level?
What solutions do you see to eliminate or reduce the disappointment of finding products available online but unavailable or out-of-stock at the store level?
Poll
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The real solution here is to have a single view of stock across stores, warehouses, and distribution centers and to ensure that inventories are available to serve customers regardless of which channel they’re shopping in. Part of this means that online fulfillment can be done from stores, which bolsters store stock. That said, store allocation is complex, and it will never be completely perfect. However, better demand forecasting (perhaps using AI) can help eke out improvements.
As Neil suggests, fulfilling online orders from store is a potential solution. It introduces new challenges of where to put the excess inventory and order preparation areas. If items are “warehoused” on the store floor, the issue of unknown available inventory persists.
Another option is a “search first” campaign. Encourage shoppers to search first then pickup at store or get delivery. Shoppers are doing that more now making it easier to close the gap. With improved supply chains, a next day ship and hold at store is possible to deliver on the availability promise and avoid inaccurate store inventory counts.
Customers don’t know or care WHY the product is unavailable; they just want the problem fixed. With omnichannel commerce a fact of life, retailers are going to have to move heaven and earth to unite products with customers.
Spoken succinctly and truthfully. This quote should be the headline at every industry conference until its solved.
Retail as a whole is inching closer to having better visibility and certainty around products available in-store that are also available online. Clothing, home goods and hardware are better performers. While grocers have a long way to go, customers are increasingly expecting products on the shelf they saw online. But managing 40,000 SKU’s is a challenge. Slowly, POS platforms, apps and inventory systems are getting better and more cost effective in helping them manage this.
Sorry, but there no “solution” to not being able to have an entire company’s worth of inventory in the backroom of each store. Have a large selection, combined with the being there element – excitment, being able to try things on, instant availbility (at least of what you do buy) – is what makes for in-store sales.
Until deeper AI fidelity is reached, to understand customer shopping intent at a level we cannot fathom, having an entire company’s worth of inventory is not pragmatic. The article talks about certain segments where this frustration is more prevalent so it shouldn’t be viewed as gospel across all categories. Beyond that, there is also a shift in consumer behavior that is required to preempt the disconnect between in-store and online comparisons. That behavior will be impacted by stronger and more value-add digital engagement that encourages consumers to embrace a more integrated shopping journey.
Neil, as usual has it correct here, but how much more needs to be invested before we reach this “seamless inventory” nirvana?
I suspect quite a lot of $ still needs to be invested before this is an expectation as opposed to a surprise.
Setting customer expectations is critical. While it is impossible to carry all products in all stores in all sizes (unless the assortment is very limited, and even then results would not support that) it is possible to implement modern planning systems which aid in driving sales and inventory planning, assortment planning, inventory allocation and replenishment and demand planning + forecasting, increasing the likelihood of owning the right product in the right place at the right time with the use of sophisticated AI/ML engines. Time to take advantage of those systems and soon.
Spot on. We call what Neil and John are suggesting as “FlexOrder”. A unified system makes it possible to connect all your channels (well, because no connection is necessary – the system is unified) – and that enables associates to seamless extend the in-store shopping experience to every sku. Absolutely critical in today’s world.
As Craig Sundstrom states, you can’t have all permutations of your product in every store. That, is why apparel and footwear are shipped in ‘rainbows’ or ‘scales’ to stores (and not to every store, either). Having the “endless aisle” concept for online browsers is a plus. Making sure that, if the size/color combination of an item is OOS in a store can be ordered from another source, will go a long way to satisfying a customer. The last step is to offer direct shipping or Pick Up In Store. There is no silver bullet (The Lone Ranger), magic wand (Mandrake The Magician) or lamp to rub (Aladdin). Oh yes, inventory accuracy across the enterprise is mandatory.
This article highlights a common challenge retailers face in syncing in-store and online inventory. Real-time data across different channels is essential to solving this issue. With a solution like the Sitoo Unified Commerce Platform, anchored by POS, retailers can bridge this gap by enabling a single, real-time view of stock across all sales channels. Using real-time data, stores can even fulfill online orders, as Rally House is successfully doing. The mobile-first POS puts everything associates need—and more—right in the palm of their hands. In today’s retail environment, associates must meet customers’ demands as they arise. They need tools that empower them to sell from other stores if an item is out of stock, with options to ship it to the customer’s home or make it available for pickup at another location. They should also be able to find quick replacements or recommend similar items to enhance the customer’s experience. This creates a seamless, connected shopping experience that will enhance the customer experience.
Truth is, most retailers aren’t doing enough to bridge the gap between online and in-store inventory. Customers expect items to be available wherever they shop, but many experience disappointment due to non-availability of items. Retailers need to invest in technology like an Order Management System (OMS) for real-time inventory tracking and should empower their store associates to leverage these tools for efficiently fulfilling online orders from the store.
To avoid disappointment due to inventory unavailability at stores, the associates can check product availability at their other stores and help customers in either collecting the item from that location or place an order on their behalf for home delivery. If retailers expect long-term loyalty from customers, they should invest in convenient shopping experiences such as displaying real-time inventory availability on Product Detail Pages. This would help customers in choosing a location of their choice.
Customers shouldn’t waste time in hunting for products that aren’t even available at their nearest store location. Ultimately, a small investment in technology can make a huge difference in reducing this frustration.
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The real solution here is to have a single view of stock across stores, warehouses, and distribution centers and to ensure that inventories are available to serve customers regardless of which channel they’re shopping in. Part of this means that online fulfillment can be done from stores, which bolsters store stock. That said, store allocation is complex, and it will never be completely perfect. However, better demand forecasting (perhaps using AI) can help eke out improvements.
As Neil suggests, fulfilling online orders from store is a potential solution. It introduces new challenges of where to put the excess inventory and order preparation areas. If items are “warehoused” on the store floor, the issue of unknown available inventory persists.
Another option is a “search first” campaign. Encourage shoppers to search first then pickup at store or get delivery. Shoppers are doing that more now making it easier to close the gap. With improved supply chains, a next day ship and hold at store is possible to deliver on the availability promise and avoid inaccurate store inventory counts.
Customers don’t know or care WHY the product is unavailable; they just want the problem fixed. With omnichannel commerce a fact of life, retailers are going to have to move heaven and earth to unite products with customers.
Spoken succinctly and truthfully. This quote should be the headline at every industry conference until its solved.
Retail as a whole is inching closer to having better visibility and certainty around products available in-store that are also available online. Clothing, home goods and hardware are better performers. While grocers have a long way to go, customers are increasingly expecting products on the shelf they saw online. But managing 40,000 SKU’s is a challenge. Slowly, POS platforms, apps and inventory systems are getting better and more cost effective in helping them manage this.
Sorry, but there no “solution” to not being able to have an entire company’s worth of inventory in the backroom of each store. Have a large selection, combined with the being there element – excitment, being able to try things on, instant availbility (at least of what you do buy) – is what makes for in-store sales.
Until deeper AI fidelity is reached, to understand customer shopping intent at a level we cannot fathom, having an entire company’s worth of inventory is not pragmatic. The article talks about certain segments where this frustration is more prevalent so it shouldn’t be viewed as gospel across all categories. Beyond that, there is also a shift in consumer behavior that is required to preempt the disconnect between in-store and online comparisons. That behavior will be impacted by stronger and more value-add digital engagement that encourages consumers to embrace a more integrated shopping journey.
Neil, as usual has it correct here, but how much more needs to be invested before we reach this “seamless inventory” nirvana?
I suspect quite a lot of $ still needs to be invested before this is an expectation as opposed to a surprise.
Setting customer expectations is critical. While it is impossible to carry all products in all stores in all sizes (unless the assortment is very limited, and even then results would not support that) it is possible to implement modern planning systems which aid in driving sales and inventory planning, assortment planning, inventory allocation and replenishment and demand planning + forecasting, increasing the likelihood of owning the right product in the right place at the right time with the use of sophisticated AI/ML engines. Time to take advantage of those systems and soon.
Spot on. We call what Neil and John are suggesting as “FlexOrder”. A unified system makes it possible to connect all your channels (well, because no connection is necessary – the system is unified) – and that enables associates to seamless extend the in-store shopping experience to every sku. Absolutely critical in today’s world.
As Craig Sundstrom states, you can’t have all permutations of your product in every store. That, is why apparel and footwear are shipped in ‘rainbows’ or ‘scales’ to stores (and not to every store, either). Having the “endless aisle” concept for online browsers is a plus. Making sure that, if the size/color combination of an item is OOS in a store can be ordered from another source, will go a long way to satisfying a customer. The last step is to offer direct shipping or Pick Up In Store. There is no silver bullet (The Lone Ranger), magic wand (Mandrake The Magician) or lamp to rub (Aladdin). Oh yes, inventory accuracy across the enterprise is mandatory.
This article highlights a common challenge retailers face in syncing in-store and online inventory. Real-time data across different channels is essential to solving this issue. With a solution like the Sitoo Unified Commerce Platform, anchored by POS, retailers can bridge this gap by enabling a single, real-time view of stock across all sales channels. Using real-time data, stores can even fulfill online orders, as Rally House is successfully doing. The mobile-first POS puts everything associates need—and more—right in the palm of their hands. In today’s retail environment, associates must meet customers’ demands as they arise. They need tools that empower them to sell from other stores if an item is out of stock, with options to ship it to the customer’s home or make it available for pickup at another location. They should also be able to find quick replacements or recommend similar items to enhance the customer’s experience. This creates a seamless, connected shopping experience that will enhance the customer experience.
Truth is, most retailers aren’t doing enough to bridge the gap between online and in-store inventory. Customers expect items to be available wherever they shop, but many experience disappointment due to non-availability of items. Retailers need to invest in technology like an Order Management System (OMS) for real-time inventory tracking and should empower their store associates to leverage these tools for efficiently fulfilling online orders from the store.
To avoid disappointment due to inventory unavailability at stores, the associates can check product availability at their other stores and help customers in either collecting the item from that location or place an order on their behalf for home delivery. If retailers expect long-term loyalty from customers, they should invest in convenient shopping experiences such as displaying real-time inventory availability on Product Detail Pages. This would help customers in choosing a location of their choice.
Customers shouldn’t waste time in hunting for products that aren’t even available at their nearest store location. Ultimately, a small investment in technology can make a huge difference in reducing this frustration.