DBA PRO CORP
Stockout Losses / Costs
Sales that could have occured when customers could not find the product they need. Not only does that result in the lost opportunity from the missed sale, the reputation of the store is damaged for that disappointed customer. But in the ever changing retail environment, stocking up might be risky when demand falls.
Retail Science’s “Advanced Demand Forecasts” overcomes the problem by a soft-landing approach, where the speed of sales for a product with declining interest is allowed to gradually slow with reduced margin, until it becomes delisted. Again, as the speed metric is real-time, we will not be restocking a slowing item just because we had high sales in the past 3 months.amaged for that disappointed customer. But in the ever changing retail environment, stocking up might be risky when demand falls.
Overstock Risk Management
To maximize sales, some store managers will over-invest in purchasing inventory. However, this resulted in spoilage as the inventory can expire or lose value.
Using Retail Sciece, we calculate the risk of overstock based on real-time demand forecasts, giving the store manager a long runway for corrective actions such as price reductions and sales incentives. And because our demand forecast is real-time, we do not need to over-invest in inventory, often we can carry 2-weeks worth of inventory instead of 3-months, as long as demand variance is stable.
Demand Fluctuations and Competitive Detection
There are times when the expected sales doesn’t happen, bringing it far outside of reasonable variance. For example, if a fast selling item which moves every day suddenly stops for a week. This is when fast action is warranted, such as research into competitive pricing. Perhaps all of the demand is going to a competitor using the item as a loss leader?
Retail Science produces real-time speed change alerts to detect demand fluctuations that are creating potential stockout or overstock scenarios.
Many store chains have difficulties balancing their inventory between locations. Often there were stockouts in one location, while overstocks of exactly the same item in another location.
Retail Science uses algorithms that helps stores managers decide on system-wide marketing campaigns, to optimize overall margin dollars, keeping levels of inventory at each location adequate for the duration of the campaign.