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How Primark and Bed Bath & Beyond Strategized Stores and Stock During the Chaos of Covid

If there has been one constant throughout retail over the past year, it’s that having the right inventory at the right time, in the right channel and in front of the right customer is an incredibly difficult promise to fulfill, especially during an unexpected event.

And it’s clear that the problems are impacting retailers worldwide. During Oracle Retail Cross Talk, apparel and footwear retailers from across the globe, including Primark, Mr Price, Matalan and Grupo Nazan, all highlighted how they had to rapidly modernize their inventory strategies as stores closed and distribution and localization became priority No. 1.

One of retail’s biggest home chains had been in quite the pre-Covid rut, but the problems posed by the crisis gave plenty of incentive to plot a full-scale renovation. In a keynote fireside chat, Scott Lindblom, senior vice president and chief technology officer at Bed Bath & Beyond, indicated that the company’s ambitious $250 million supply chain overhaul started with the realization that it simply hadn’t invested in new technology for a long time.

“Part of that was because of the business model which was really more store-focused versus centralized functions in terms of inventory and space planning, etc., so there was a core shift in that business model,” Lindblom said. “There was the realization that the legacy systems probably don’t support that shift. There’s lots of gaps in terms of capabilities.”

Deloitte has served as the home retailer’s migration services partner, helping the company build a roadmap Lindblom called “the city plan.” The plan identified areas where legacy systems no longer supported the retailer, and helped Bed Bath & Beyond select Oracle Cloud as its Enterprise Resource Planning (ERP) technology provider in February. With the newer solutions, the retailer aims to gain greater channel-specific visibility, which Lindblom said the company didn’t have with its legacy platforms.

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Lindblom now sees demand forecasting as a huge opportunity for Bed Bath & Beyond going forward.

“We think we can dramatically increase inventory turns—actually lower the amount of inventory that we carry and drive sales through the better management of inventory,” Lindblom said. “Having the right inventory and the right amount of inventory in the stores, DCs or however we’re going to fulfill is a huge challenge, and again if we can figure that out, there’s huge value in that.”

While Bed Bath & Beyond is looking to engineer a companywide turnaround that was in motion well before the pandemic, many apparel and footwear companies adopted new strategies once they realized how easy it was for the supply chain—and store operations—to be disrupted.

Primark, Mr Price maneuver seasonal sales

Primark was in an unfortunate position at the start of the pandemic, it that it doesn’t have an e-commerce presence so it had to make quick stock decisions. But after temporarily pausing stock with suppliers—Primark later honored their contracts—and reassessing its geographic inventory positioning, the retailer was able to get the right stock to the appropriate markets upon reopening.

“Given the very different geographical trading conditions in each market which we trade in, we had to move orders around,” said Stephen Vanoli, cross functional business director at Primark. “We had stock that was set for our depots in Northern Europe that we sent to Southern Europe, we had U.K. stock that went to the U.S., vice versa and all combinations in between. We relied on the skill of our brick-and-mortar teams rather than any systemic functional solution to do this.”

As the 2020 holiday approached, Primark’s brick-and-mortar teams took the merchandising strategy of “little and often,” Vanoli said, having a centrally coordinated intake plan and releasing its open-to-buy plan in stages as lockdowns occurred again. This was all powered by what Vanoli described as a “laser focus” on shipping to get products to stores immediately upon reopening.

“What was in the stores immediately post-Christmas has been sold through very quickly within our everyday, clearing price policy—effectively, we’ll go once, go deep. As far as what’s great about that, is it sort of enabled us to open our doors to our customers now with the latest spring trends,” Vanoli said.

Like Primark, South Africa’s Mr Price Group had to halt all in-store trading at the beginning of the pandemic due to government regulations, right at the start of its winter campaign.

“You had all this stock coming in that’s winter merchandise, and we don’t have long winters,” said Marilize Redelinghuys, head of retail modernization at Mr Price Group. “By the time you get to trading it, you really have some catching up to do to offload the winter merchandise as quickly as possible.”

When stores reopened, the retailer also had to adapt to in-store shopping trends, which had shifted from malls to local stores. With demand coming from the smaller stores instead of the larger ones, Mr Price had to rethink its traditional stocking strategy.

Mr Price now emphasizes knowing exactly what sizes are in each of its stores so that they can replenish on demand, according to Redelinghuys.

“I think also as a value retailer, a big emphasis for us is to make sure that we don’t have stock that’s dormant,” Redelinghuys said. “Dormant stock could be stuff that’s in the warehouse, or stock that’s in transit or stock that’s been consolidated between stores, so you really want to emphasize making sure that you target your stock in the right locations. A big part of that is making sure that you have the analytics in place to know what your inventory position is.”

Grupo Nazan transforms from catalog to e-commerce

And amid the pandemic, Grupo Nazan, a Mexico-based footwear seller, essentially overhauled its retail operation from nearly 100 physical stores and catalog-based ordering into a digital omnichannel enterprise.

In implementing several Oracle Retail solutions, Grupo Nazan was able to display inventory to customer service representatives, optimize logistics costs and implement promotions for different customer segments based on their interests, according to Ramon Rodriguez, chief marketing officer, Grupo Nazan. The company leveraged data from its catalog sales to get a better picture of where it should expand digitally, and where more inventory should be positioned.

Before the store closings, physical stores were responsible for 90 percent of revenues and online sales hovered at 10 percent. After the stores reopened, online sales increased to 34 percent.

“We have fewer people entering our stores, because they’re using more of the pickup stations and return stations outside, and that’s a huge change for us,” Rodriguez said. “Like a lot of companies worldwide, we’re not selling the same amount of product as 2019. But we have a different operational cost, and we’re more effective, because we investing more in bringing more of our products online.”

In response, Nazan converted its distribution center to fulfill all online orders, regardless of origin. Using Oracle Retail Order Broker, call center agents were able to manage orders quicker, increasing fulfillment levels by 4 to 5 percent, and gain more visibility into which items were in stock in specific individual stores. This ensured that orders were delivered to each customer’s doorstep as quickly as possible.

“A few years ago, if a shopper was associated with one store, you were able just to buy items from [the store closest to you],” said Rodriguez. “With our Order Broker, right now we’re able to have a unique number, and with that, shoppers can buy a product in any store [and have it shipped to their home] or they can return the product in any store. They would have the same buying experience in any of our stores.”

Matalan gains greater control over markdowns, channel sales

U.K.-based apparel and homeware retailer Matalan had undertaken significant investments in the store and warehousing operations and online systems in the last three years, but the company’s merchandise planning and reporting capabilities were still stuck in the past, according to Gareth Jordan, head of merchandising, men’s wear and sportswear.

Matalan sought to implement new systems that could provide an integrated view of performance and improve collaboration across channels and functions, and ultimately enable the business to better align to customer preferences while expanding the assortment of relevant products at a macro and store level.

The merchandising teams at Matalan have used Oracle Retail Merchandise Financial Planning (MFP) for their weekly sales stock and intake planning since July 2020, enabling the company to improve pre- and mid-season planning and plan sales by channel and type, whether it was full-price, promotional, clearance or refund sales. This gave the retailer more control over how it could manage markdowns, according to Jordan.

“It’s given us a great ability to plan by an e-comm mix and a store mix, which we didn’t have before, and that’s hugely critical for the business,” Jordan said. “Before Covid, our online mix was relatively small for a retailer of our size in the U.K.—it was generally about 12 or 13 percent of our total sales.”

Jordan said the goal for Matalan is to increase that e-commerce mix to 20, or 25 percent and beyond. On the whole, the merchandising teams have greater trust in the data they get within the platform and feel more comfortable sharing it freely with others.

“There’s fewer questions being asked about our data, and any questions and worries about the reliability of our data is a thing of the past. We’ve got greater visibility of our numbers,” Jordan said. “This isn’t just a merch tool. It’s a tool that’s used by the e-comm teams and the finance teams.”