These Retailers Believe Shrinking Inventory Will Expand Profits

An average big box store, like a Walmart super center, is sized about 100,000 square feet. Previously, with that much space, it was assumed that large stores like these would be stocked with a massive amount of inventory. In the new age of digital consumerism, however, shoppers’ expectations have changed. This affects the return on investment of store inventory.

The Changing Expectations of Consumers

Shoppers want to have items delivered to their homes, to be able to compare prices, and to have customized options to browse. As a result, many stores have found that a larger inventory is hard to move, track, and market. Some stores, like Lowes, have recently announced they will scale back their inventory. Only items that sell well will be on their shelves.

The Nordstrom Local Experiment

Nordstrom is taking a more innovative approach to the inventory dilemma. Opening Nordstrom Local stores, the retailer is testing out inventory-free locations that function as experience and service stops. These local stores are smaller and offer experiences like salons, bars, seamstress services, and fitting rooms. Shoppers order products online and can pick them up in store, try them on, and then easily return items or have them tailored if desired.

Delivery and Pick Up Inventory Management Solutions

Besides simply scaling back inventory or drastically opening inventory-free stores, there are options for addressing the problem of inventory being harder to move in brick-and-mortar businesses. Many stores now offer free store pick up options to minimize the amount of inventory stocked on the shelves. RevCascade staff have tablets where consumers can see and order items that will be delivered from the store’s warehouse directly to their own home- improving customer satisfaction when inventory isn’t found in-store.

Predictions of Future Inventory Adaptations

Given that brick-and-mortar stores are struggling to keep up with online retail, it was a surprise to some in the industry when online giant Wayfair announced physical store openings. Their experiment points to a new type of store that showcases options through a small inventory in order to drive to online business. Technology-like apps, beacons, and digital price tags all suggest that inventory management will evolve drastically in the coming years.


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