Vintage retail? Another reminder of the circular aspect of inventory.

I read an interesting piece in the Wall Street Journal last week about the rise of vintage retail. The concept that hand me downs are now becoming cool! Is this a blip on the retail radar or another indicator that consumers’ attitudes continue to evolve. The latter.

We have long talked about the notion of a circular economy when discussing retail. The retail supply chain, as most supply chains, is no longer a simple linear process. Rather it has become a network and the inventory no longer simply flows in a linear pattern. Orders are fulfilled from inventory that is all over this network – store, distribution centers, factories, partners to name a few. The inventory that satisfies these orders also does not end its journey at the final consumer, but its life cycle has increasingly extended beyond that end consumer. On the contrary we are seeing an increasing move towards finding ways to reintroduce inventory back into the supply chain, whether to be more environmentally conscious or to harvest a new source of working capital.

What the research from Accenture is highlighting is another avenue this inventory is coming back into the supply chain. Now under the guise of being vintage goods, a one of a kind unique item. This type of item is differentiated in the fact that it has been used, it is a bit worn and has a history. It also appeals to the desire to be more environmentally friendly. Rather than discarding the item into a landfill, it gets a second life.

So what does this mean for retailers? Continue to think like your consumer. The majority of your consumer will probably still want to purchase the item that you are selling, but is there an opportunity to offer a line of vintage items? Not necessarily from your brand. Does offering these items offer your consumer an extra incentive to come visit your physical store? Adds a treasure hunt experience to attract foot-traffic. Could you encourage exiting customers to trade in items for credit or discounts on new purchases? This might be a source of inventory that you could then position in your vintage section. Maybe even see if your consumers would trade in items from other brands but fit your target persona’s wants.

Vintage and reselling inventory is not for every retailer. But every retailer needs to adopt this mind set – it is all about the circular economy. What can a retailer do with the secondary market? Can they appeal to a desire for vintage items? The retail supply chain is no longer linear, it has become circular. The rise of vintage is another indicator that retailers can ignore this at their own peril.

Customization: more than monograms and pant hems.

We as consumers have demanded and started to expect that our brands and retailers provide us products that are personalized. Beyond simply adding our initials to the sleeves of our Ralph Lauren shirt or having to hem our new Hugo Boss suit, product customization is moving towards a place where the consumer can dictate what they want from the brands and retailers.

All one has to do is look at how we can customize our automobiles – BMW’s Spartanburg factory could run a full year worth of production and never produce the same car twice. Or how we can call up our sneaker companies such as Adidas, New Balance or Nike to create customized footwear for our enjoyment. The market is also seeing the rise of brands looking to create bespoken clothing such as Indochino, Suit Supply or MTailor who look to create suits, shirts and other items simply by taking your measurements over their apps. Of course these services are not without some growing pain issues…I have two Indochino suits that both have a sizing story associated with them!

Indochino suit…looks good. But it took some work to get here…

While customized products are becoming more of the norm, what brands and retailers need to starting thinking about goes beyond simply products. Customize the entire experience for consumers. The inventory is only a part of the overall retail ecosystem. Consumers expect greater information about their purchase, flexible fulfillment and friendly return policies.

• Greater information, greater insights expecting by consumers. The experience for consumers starts much earlier than it did 20 years ago. Brands and retailers need to be there when that journey begins. That means rich data, entertaining information and deeper knowledge sharing. Where did the product come from? How was it manufactured? What was its journey to its final destination? Can I customize this information – shopper A might be more environmentally conscious so give her lots of data on the sustainability efforts, while shopper B is more interested in how others use that product so give him YouTube videos or Instagram pages of how the product is being leveraged.
• 2 Hour fulfillment? Sure as long as it is one option. Retail giant Amazon has trained us that the 2 hour fulfillment window is nirvana. Is it really? While instant gratification, in this case 120 minute, is a driver for consumers, it is not always the right option for fulfillment. Savvy brands and retailers are starting to realize that they need to rethink this, rather than chasing Amazon, set their own strategy when it comes to order fulfillment. It is hard to compete when Amazon’s fulfillment costs, as they have only continued to rise to the tune of $34 billion annually. Fulfillment needs to be seen as part of the customization process. Want it delivered in 2 hours or in a month, sure. Need it shipped to a local pick up locker for you to retrieve after work, okay. Want it shipped to your vacation hotel next week, absolutely. Retailers and brands need to start thinking about customization in this context – when I want it isn’t always within 2 hours.
• Circular life of inventory demands for better returns. Returns and the circular aspects of retail are becoming of greater importance. Rather than viewing this as a cost center, savvy brands and retailers are seeing returns as a way to pull back working capital into their supply chains, as a touch point with customers and as overall good business. Retail giants such as Home Depot still view returns as a cost center, trying to minimize the overall cost of processing the returns as much as possible. A short term cost cutting strategy. While other retailers such as Kohl’s has been willing to take the chance, and dance with the devil, allowing Amazon returns to be processed within their stores. Inviting the biggest disruptor into your store! Smart. Get those customers into your physical store, allow them the ease of returning that Amazon item and yes try to sell them something from your inventory. I have heard customers say, “well I needed to get product A, and had to return this Amazon item, so might as well do it all at Kohl’s.” This is simply the beginning. More retailers will realize that they need to offer simple and customized returns for their products, sometimes it might call upon partnering with other players in the space.

Of course the drive towards greater product customization will continue. Whether it is your BMW X5 or your new pair of Adidas, we expect our brands and retailers to try to amaze us by better meeting our personalized needs. But it is simply not in the product, but in all that surrounds the retail experience.

Returns and reverse logistics, you can no longer ignore this opportunity.

Hear some of my thoughts on the world of returns and reverse logistics. Always fun talking to Russell and Supply Chain Brain. Think about returns and reverse logistics as an opportunity to capture a new inventory source.

 

Happy July 4th! Don’t forget your supply chain…

Okay I realize that I am a tad strange to associate the United States biggest day with supply chains but a conversation today sparked some thoughts….

The premise: I was chatting with friend today about the logistics that go around the July 4th barbeques – how much food is needed, what is the perfect mix of food and what about the beverage selection???? All this made me think about…you got it….supply chains. The barbeque dilemma is a microcosm of our supply chains.

• Demand sensing – this hinges upon who we invite, their ages and their preferences…or our belief in what they “want” to eat. Do we have a large carnivorous group? Do they prefer hamburgers or hot dogs…what about chicken and ribs…..what about fish? Ar they vegetarian? What about kids? What kinds of cheese do they want on their burgers? Do they prefer mustard or…gag…ketchup on their hot dogs? We naturally calculate and try to determine what demand we might get from our customers…aka guests. Add to the equation potential desire for organic, low nitrate or hormone free options. When we go to the super market, we are doing some forecasting based on what demand we believe, our customers want.
• Inventory Optimization – When all the food and goodies have been purchased, we also begin with inventory strategies…how much do we leave in the refrigerator/freezer (aka raw materials), how much do we throw on the grill (aka WIP) and how much is sitting on the tables ready for consumption (aka finished goods). Some of this inventory has a shelf life – try not to leave out potato salad in the blazing sun for 2 hours….As we work the grill we try to constantly gauge the demand, the pull if  you will of what we are manufacturing. Should the grill be going at full capacity? How many finished goods do we really want to let sit on the table?
• Demand Shaping – As the grill is working…and no one is eating the chicken…do we start “promoting” how great a grill master you are, especially with chicken. Grilled just right without over drying the chicken. Oh and I just picked up the greatest barbeque sauce from South Carolina that I let this chicken marinate in for 48 hours….
• Reverse logistics – well I will not get into this…but think about the accessibility of facilities….

I realize that most people tomorrow will not think about supply chain and the barbeque, but maybe for a split second tomorrow think about supply chain best practices and how they apply to your barbeque.

Just think, if you could get historic eating habits of all your invitees, coupled with some analytics of trends and consumption habits and you could purchase the right amount of food and the right mix. Having some manufacturing processes in mind you could ensure that once the burgers, hot dogs, chicken, etc that come off the grill end up right on someone’s plate for perfect fresh consumption. You would then ensure a fantastic experience with no left overs…oh wait maybe the leftovers are what make the barbeque fun for the hosts!

Happy  4th of July to all!