It is Back-to-School sale time. There are advertisements for the office superstores and the big box retailers. The goods that line the shelves, end aisle displays, and floor displays were ordered back in April and May. The goods were shipped in May from Asia and June for the goods still produced in the United States. Back then we were still in the belief that we were still in a recovery.
On August 12, it was reported that July retail sales (excluding autos) were up 8.5% from July 2010 but essentially flat from the June results. On the same day, the Wall Street Journal reported that economists that they have surveyed predicted that August sales would be the second month in a row with flat sales performance. The title of the WSJ article was “Heading Back to School, But not to the Stores” which basically sums it all up.
On August 16th, there is an article from the AP that Wal-Mart and Home Depot are upgrading their profit outlooks for this year. As we have pointed out in this blog, The Great Recession forced many companies to lean up. They have had to tighten up their planning and inventory management. They have learned to operate with less employees and adjusted the product offering and mix to cater to more and more value conscious consumers.
Retailers also have learned from 2008 when they wound up with piles of unsold merchandise that they had to discount up to 80 percent or sell to liquidators for pennies on the dollar. Some of their peers, including Circuit City, shuttered. In fact, several retailers that have survived the Great Recession by cutting costs, keeping inventories lean and pushing either low prices or high quality are reflecting confidence going forward.
Basically, with flat sales Wal Mart, Home Depot, and others are able to improve their profit outlook on flat sales.
Are you able to do the same?
The key is to tightly manage planning, inventory, and personnel. Things our clients have been doing since the start of The Great Recession. Any business that has survived The Great Recession has probably done this to some degree.
We believe that this is a never ending activity. An important part of the Lean philosophy is Continuous Improvement. Planning parameters and inventory levels must be constantly challenged, tweaked, and updated to allow your business to operate in its most efficient state. Even if your business is not retail, evaluating your product offering is must be done with equal vigor. Lastly, and unfortunately for the economy at large, employment must be tightly managed at well. We are seeing an increase in hiring freezes and outsourcing of support functions.
Sound planning and optimized inventory can be achieved. With a tool like DemandCaster and our process, this can be achieved in less time and with less people than you might think.
What are your current planning and inventory challenges? Post them here or send us an email, we would love to discuss your challenges and suggest opportunities for improvement.
Working effectively and efficiently, we will persevere!
You may have seen my post on Twitter yesterday … Back-to-school worries weigh on teen retailers.
