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Retail Marketing Stunts and In-Store Safety Stock

This is an archived post from OrderDynamics, now Tecsys retail division.
Retail Marketing Stunts and In-Store Safety Stock As an HP Category Manager, many years ago I was faced with a dilemma. We had launched one of our professional line photography printers. It was well designed. The machine would calibrate itself to the color of the paper, and adjust for accurate imagery. It was a high end, twelve ink technology when the competitors had eight at best. Plus, there were plenty of other nifty bells, whistles and new features. Nothing this sophisticated existed anywhere. It was the PhD of photography printers when the closest competitor was only in primary school. HQ put significant marketing behind the effort. Full beautiful ads in all the right magazines, with digital ads on the right websites. A solid market penetration strategy. Despite this, and the big push with our channel partners and sales reps, they weren’t selling. Our aggressive forecasts resulted in warehouses across the continent stacked high with these SKUs. Worse yet, the stockpile was growing weekly to meet the original forecast. You can imagine the inventory costs. We ran through markdowns, offers, and promotions. Nothing. An inventory management nightmare.  

Read More: How to Increase Your In-Store Traffic with A DOM


Retail Marketing Stunt 

Then, ‘Contact’, the biggest photography festival in the world took place in Toronto. At the festival, my team ran an event called the HyPe Gallery. We held a photo contest for professionals and made huge prints at the free Gallery where we rotated images daily. Given the lackluster year for this photography printer lineup – I ran a major special offer. But, we would ONLY market the special offer at the event. Channel partners were told, but not encouraged nor supported to repeat the offer. To that point, there was little previous success selling these units. Frankly, I don’t think our partners even took the offer seriously, when first proposed.

Going Viral

We ONLY advertised the promotional offering at the HyPe Gallery. No other word of it anywhere. It was a significant offer. On the highest end, the deepest discount reached 35% - 40%. However, it was only available on the expensive lineup. Across the supply chains, there were boatloads of inventory. No need for in-store safety stock, right? ... Famous last words ... When I first proposed it, no one batted an eye. It was another retail marketing stunt, among many. Yet, the offer went viral within the professional photography community. It was a healthy discount, and it was a secret (only advertised at one physical location). The offer spread exclusively through word of mouth. In fact, it was word of mouth on this secret-ish promotion that made it go viral. Rumors were abound about us blowing out the last of the super-printer inventory. Within 4 weeks we burned through 60 weeks of supply. Our costly amount of inventory excess took a nosedive. All North American inventory with a glut on these very slow-moving SKUs was fully depleted. Carrying costs – gone. Rumor had it that the major competitor's CEO had even yelled at our largest speciality retail chain CEO. He was furious about their completely stalled sales. Mission accomplished!  

Related: Real-Time Inventory Visibility


In-Store Safety Stock Important

Fortunately, we had set the printers in the showcase gallery aside as in-store safety stock. They weren’t touched by our online orders. Partners and customers could not purchase or allocate against them. They were meant for display at the Gallery. It would have been embarrassing to have no display during this high traffic, high customer demand time.

Build-A-Bear Example

CNN Money’s headline “Build-A-Bear CEO sorry for botched Pay Your Age Event” reminded me of my story above. In the case of the Build-A-Bear’s event, it achieved its goal of driving attention and in-store traffic. However, on events like this, you need to make sure you have the right technology to support it. A robust order management system should have provided clear online real-time inventory visibility. On extreme swings like the Build-A-Bear event, in-store safety stock is another concern. Build-A-Bear might be unique in requiring in-store assembly. But for most retailers, safety stock can ensure you hottest items aren't all snapped up online. There are a few still in-store for foot traffic purchasing. You can’t predict the virality of an offer. At the best of times, it is hard to predict customer demand. But by showing real-time inventory level at each store, it might adjust customer expectations. And customer service expectations are definitely on every store manager’s mind at these times. A big part of this initiative was driving in-store traffic. Actually, Build-A-Bear is a perfect example of focussing on the in-store experience. However, during peak demand times, like this promotion, in-store safety stock makes sure online orders don’t empty the shelves. By keeping some of the store merchandise allocated for in-store purchases, it encourages customers to come to the physical store. In-store safety stock ensures shoppers who show up, have an opportunity to get in on the deal. It’s won't be just for the fastest online purchasers. This might not have been the only challenge... but...  

Read More: 4 Reasons You Need Real-Time Inventory Visibility


Does In-Store Safety Stock Save the Day? 

Would in-store safety stock have saved the day at the Build-A-Bear event? Probably not. But total stock out situations like the HyPe and Build-A-Bear events are rare. More common are new ‘hot’ selling products that you don’t want depleted only from online sales. You want buffer stock. You want some safety stock levels on these SKUs. And you DO want hot items to encourage store traffic - that often results in additional purchases. Make sure your order management system is ready for any event, viral or not. Work out the right level of extra stock you need. Then lock it in with your OMS. This makes sure you are able to meet the service level your customer expects of your brand. Also, make sure your system gives you the real-time inventory visibility today's customers demand.   Author: Charles Dimov is the VP of Marketing at OrderDynamics. Charles has 21+ years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, Director Sales and Category Management for ecommerce and channel goods. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.
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