| 8/4/2009 |
Paula Rosenblum |
| Buying for Margin Rather than Assortment |
In our continuing quest to understand what Winning Retail strategies will look like this holiday season, we spoke with Richard Hastings, CCE, Consumer Strategist for Global Hunter Securities, LLC.
In good times, the assortment plan was to present (in Mr. Hastings’ words), “a tropical rain forest of inventory” when a customer walks into a store. BUT that rain forest represents a lot of cash commitments. Retailers just don’t want to tie up as much working capital anymore. Mr. Hastings also contends the emotional “pop” associated with having a full assortment has diminished because of the internet phenomenon. Cross-channel shopping can allow the retailer to fill the shopper’s order from other parts of the chain, and that “buying for gross margin” is here to stay. This philosophy was lurking on the periphery, and has been put into the center of the game for most retailers. It is worthy to note he believes Walmart is not adopting that philosophy. It doesn’t have to. While many retailers may believe it’s better to be out of stock than to take excess liquidation markdowns, Walmart can push much of that risk back on its vendors.
All in all, I found the conversation fascinating. I’m not sure I buy into this story hook, line and sinker: it feels very risky, but it was interesting to get another point of view on our under-stocked world. What do you think?
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| keywords: Retail, IT, Technology, Holiday Season, Product Assortment, Merchandising |
