Inventory Management Made Easy by Reggie Andersen

Devising an inventory management program that will generate maximum sales and profitability requires an advanced computerized program that is difficult and costly for a retailer to implement, but should be offered as part of the supplier program.

Failure to customize video sell-through programs to the needs of individual stores most often will result in erratic sales performance and lower than expected profitability. Because the dynamics involved in achieving sell-through success are different in each store, the program must be tailored to the individual situation. A cookie-cutter approach that treats all stores within a chain as essentially the same is a sure recipe for disappointment.

The supplier must devise an inventory management program -- including the size of the section, the category of titles to be stressed, the price points to be offered, and the signage and promotions to be featured -- to the particular demographics of the store. As retailers often do not have the time or extra resources to manage the complicated section on a store by store basis, especially with the enormous number of titles involved in video sell-through, finding a supplier who provides that service is vital to cashing in on the category's full potential.

Although many suppliers are now jumping into the sell-through video marketing arena, choosing a company that has extensive video experience in the supermarket environment is important. Properly managing a sell-through section is not easy. Suppliers must not only have a large number of video titles available but also be able to analyze the section's potential for succeeding. To do that, the supplier should already be familiar with the supermarket industry and have a demonstrated ability to provide solid retail support at store level. A successful program requires constant, efficient in-store service by a fully trained, experienced service staff. The supplier must be able to execute at store level.

One solution to ensuring that the supplier selected can fulfill the program's promise may be for retailers to choose a company they already have a buying relationship with or that at least has considerable experience servicing supermarket departments.

Ensuring that the video sell-through program is managed primarily by the supplier -- rather than requiring extensive in-store labor -- can be crucial to maximizing in-store profitability. The difference between staffing the department and selling product and having to run the entire operation -- from selecting titles initially to charting sales to restocking the fixtures -- is significant and can tie up a tremendous amount of valuable time.

The best programs minimize the amount of in-store labor necessary to run the section by providing a complete inventory management service. The other option -- to manage the section in-store with minimal outside help -- is often frustrating and can eventually lead to failure.