Retailers Take Action In a tough business climate, here's how some leading retailers are revamping operations to stay in the game.
Involuntary churn, which occurs when a credit card doesn’t work, is a problem for more than the finance department. For example, a company knows 70% of credit card hiccups are resolved favorably within 10 days, yet it’s scheduled to ship a box in two days. Does it make sense to ship and potentially not receive payment? Or to wait and possibly annoy the customer? One way to attract and keep a wider range of customers is to offer multiple subscription tiers. A business might introduce smaller product sizes, or entry, mid- and high-level versions. Tiers can address consumer sensitivity to pricing, which currently is a top challenge, says Paul Chambers, CEO and co-founder of the Subscription Trade Association (SUBTA), and CEO and founder of Core3 Solutions, parent company to Sip & Savor and other businesses. However, tiers boost complexity. Many subscription services need to order products while they’re still estimating subscriber counts. By capping the subscriber count at a certain number and creating a wait list, subscription businesses can avoid overstocking, says Sarah Williams, founder and CEO of Launch Your Box, a resource for subscription businesses, and the subscription business, Framed! One tool that can assist consumer- facing businesses, including subscription companies, is AI. “Retailers can use advanced analytics and AI to forecast demand, optimize inventory levels and personalize the customer experience,” Zheng says. GETTING THRIFTY Julia Meadows, founder of A Curated Thrift, says she’s looking into deploying artificial intelligence. Meadows launched her subscription business about five years ago, marrying her love for thrifting with experience in fashion styling. Many people find buying secondhand or shopping in thrift stores overwhelming, Meadows says. She offers customers a complete, thrifted outfit every month or seasonally. The goal is
Macy’s has closed 80 department stores since February 2020 and announced an additional 150 will close over the next 3 years. Since February 2020 it has opened one dozen small- format stores that feet (one-fifth the size of Macy’s mall locations) and plans to add an additional 30 locations by the end of 2025. are 30,000 to 50,000 square
Nordstrom announced plans to open 23 Nordstrom Rack stores, in mostly suburban markets, through spring 2025, with locations ranging from 23,000 to 36,000 square feet.
CVS is rationalizing its store base and plans to close dozens of pharmacies located within Target stores in early 2024.
Bath & Body Works plans to have two-thirds of its stores outside of malls as part of its long-term strategy, as off-mall sales performance exceeded in-mall stores.
IKEA opened more than 70 new, mostly small-format stores in 2023.
Walmart announced a 5-year plan by 2029 to convert 150 locations to new concept stores featuring improved layouts, expanded product selections, and new technology to add to the consumer shopping experience.
Source: Retail in the Red , BDO
“We can initiate timely replenishment orders and ensure products are readily available to meet customer demand,” Martinez says. By deploying these tools and processes, Leather Skin Shop has enjoyed up to 70% year-over-year growth, he notes. SIGNING UP FOR SUCCESS Along with the challenges that brick- and-mortar and ecommerce retailers must tackle, subscription businesses face a few more. For instance, “subscribe and save” offers on products consumers use regularly, such as shampoo, offer predictable cash flow and can be fairly straightforward to operate. Yet they still must navigate obstacles. One obstacle is consumer fickleness. Many start a subscription, only to pause
it months later. “It’s often not quite as predictable as a business might prefer,” says Robbie Baxter, founder of Peninsula Strategies, a consulting firm focused on subscription businesses. In addition, different consumers will go through the same product at different rates. If the established rate doesn’t fit some consumers’ needs, they may decide to cancel. Subscription boxes intended to delight customers with new products each month often encounter additional operational challenges. Baxter provides an example: A customer joins a clothing subscription service in June. Should she receive summer clothes or the popular basics, which aren’t seasonal? “It can become complicated with different rules for different people,” he says.
34 Inbound Logistics • August 2024
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