By Gordon Hecht, Serta Simmons Bedding
We’ve had it pretty easy for the past couple of decades.
We lived in a McDonald’s/microwave world. Instant everything! There wasn’t much, other than a swimming pool or a new roof, that you couldn’t purchase at 9:00 a.m. and have possession of by 9:00 p.m. You may remember a men’s clothing store that promised same-day alterations (I guarantee it), and a wave of 180-second custom pizza joints. Many retailers got in the mode of offering same-day delivery on many items.
I am not a geopolitical expert and won’t waste time trying to figure out how this supply chain mess got started. In the short run (and we all live in the short run), playing the Blame Game doesn’t solve the problem, nor change the conditions under which the game is played. Today the goal has to be how to navigate around the potholes and guardrails that are in place to create the smoothest path to gaining and completing a retail transaction.
Our shoppers have very simple requirements. Since the time humans first walked on the moon, the buying decision has been based, in order, on an incredible price or promotion on the right product, in a convenient location, with the expectation of delivery on demand.
Shortly before 2020 the order changed. Possession, in the form of convenient, on time and low-hassle delivery, became the most important factor in buying decisions. Place came in second, with shoppers looking for an easy-to-find location with a simple initial transaction. Product placed third, backed by ample peer reviews, while promotion and price moved to the bottom.
For the first time, people wanted convenience and were willing to pay for it. Thus, the rise of Amazon Prime for $119 a year and a Disneyland MaxPass at $20 per ticket.
But supply chain problems have altered how you win at the Waiting Game. Here are a few suggestions to help you stay ahead.
Under normal circumstances, I am not a fan of inventory. It costs money and loses value through damage, shrinkage and obsolescence. But these are not normal times. Invest in and manage your inventory by going narrow and deep. Following the 80/20 rule, you’ll get 80 percent of your sales from 20 percent of your display samples. Narrow that down to the real seven heroes that your team sells the most. Then knock the two lowest-priced models off that list (people will pay extra for convenience). Invest the time and space to warehouse a four-week supply of what you will sell and replenish weekly to keep the inventory stable. Promote and tag your five winners as Guaranteed In-Stock models.
Sell What You Got
I’ve been in very few retail operations open more than a year that don’t have oddball merchandise that is over-parked or slightly damaged. There’s no better time to drag that flotsam out of the backroom, clean it up, and tag it for sale. Social media provides an awesome venue to promote this to the “U-Haul it and Save” crowd.
Sell What They Got
There’s no better time to partner with your factory territory managers to order inventory based on what is available for immediate or quick production. Having some inventory beats having nothing in stock, and many shoppers are compromising on first choice to get quick choice. Factory inventory changes daily; figure out what they have and place your order post-haste.
Guarantee In-Stock and Delivery Dates
No, I didn’t just find a crystal ball and don’t have any prediction as to when the current supply crunch will end. Rather, I do know that there will be a failure along the way, and your customer will want some sort of price adjustment when that happens. Rather than paying unreasonable ransoms to buy back your sale, why not settle it up front?
Start with the five winning products that you inventory. Let the world know that these models are guaranteed to be in-stock for next-day delivery. If you run out of stock, a shopper can reserve from the next shipment and be rewarded with $100 off their purchase or a $200 in-store credit for add-on accessories. Let them know that no further adjustments will be made.
For the other 30 models on display, start with a reasonable expectation of arrival time: as an example, 28 calendar days. (Don’t make the mistake of quoting working days; you’ll regret it in one working day.) If the merchandise is not available for delivery in the agreed upon timeframe, offer to pay the customer $10 a day up to $100 in a price adjustment. Have them understand that $100 is the maximum credit per order (not item) and that the clock stops when the merchandise arrives at your facility, not at their home (customers can decide to delay delivery, but it shouldn’t cost you).
The Truth, the Whole Truth, and Nothing but the Truth
Your shoppers are going to hear what they want to hear. If you tell them an order takes three to four weeks, they will be calling in two weeks. Start by taking the lower number out of your estimate. A three- to four-week timeframe should be quoted as four weeks. As always, you cut down on aggravation when you under-promise and over-deliver. You may even consider adding a week or two to the longer date.
Your sales team may believe that they are gaining a competitive advantage by quoting short to get the sale. But any gain will be lost by the amount of time and money spent to save that misquoted order.
The Bad News is Good News
There are disruptions in deliveries across the board. Everyday items like rice cakes and ketchup packets, as well as rarely purchased items like construction material and luxury yachts, are all out of stock. Your shopper has already experienced it and should be mentally prepared to wait.
Capitalize on the inventory you have, the incoming merchandise flow, and reliable, honorable waiting time expectations, and you’ll win at the waiting game.
Gordon Hecht is Senior Regional Manager/Strategic Retail Group at Serta Simmons Bedding and a regular contributor to YSN. You can reach him at firstname.lastname@example.org.