The Rise And Benefits Of No-Inventory Stores

Guy Yehiav, Zebra Analytics, General Manager and Vice President, Zebra Technologies

“Try it before you buy it,” the familiar saying goes. Brick-and-mortar retailers have embodied this concept since the inception of physical stores. The saying is taking on a different meaning for retailers seeking to expand their service-oriented offerings and, in turn, reimagine the concept of physical stores. No-inventory stores are exchanging storefronts filled with large amounts of costly inventory for showrooms stocked with personal stylists, cafes or office space.

The concept of the store as a showroom benefits retailers, their customers and their workers. The combination of decreased square footage, lower rents and freed-up cash typically tied up in massive inventories creates new opportunities for all to enjoy. Consolidating most inventory in a few central locations, rather than scattering it across all stores, will increase margin and inventory turns significantly.

More Profit For Retailers

Imagine a store where only one of each item available for purchase is on display. The store as a showroom is not a new concept, as furniture and electronics retailers have been carrying out this practice since their inception.

When applied to other sectors of retail, however, the concept is leveraged differently. With this new store format, retailers don’t need overly complex supply chains and planning systems. While adjustments will certainly be made to ship greater amounts of product directly to customers, reducing the number of store deliveries can streamline a retailer’s buying and shipping processes and dramatically reduce costs. Products are simply shipped to consumers from the nearest distribution center.

Retailers that utilise the concept of no-inventory stores also save money on lower rents. Why lease 10,000 feet of store space if said location is only keeping one of each SKU on hand? Furthermore, retailers save by having fewer markdowns on excess, unsold inventory. The funds can be reinvested in new experiential offerings, which customers truly crave in the modern age of retail.

More Value For Customers

Again, no-inventory stores require less space than traditional stores. When making the shift, retailers can certainly downsize and pocket the savings. An increasingly popular move, however, is repurposing the unneeded space to host other services.

In-store shopping is rapidly becoming experiential, with many retailers devoting freed-up space to new offerings such as nail salons, fresh-pressed juice bars, co-working spaces, gyms, and streamlined returns service desks such as “Happy Returns.” When inventory only takes up a fraction of store space, stores can serve as local hubs for customers to relax, enjoy amenities and take part in a highly personalized shopping experience. Customers will come to pick up online orders, see merchandise they’ve viewed online in person, and get style advice and product recommendations from expert store associates — experiences that can’t quite be replicated when shopping online.

By eliminating excess inventory, retailers can focus fully on the customer and provide them with the best in-store experience. Over time, this fosters brand loyalty, leading to bigger basket sizes, increased shopping frequency and fewer returns.

A Better Experience For Employees

Customers are not the only group benefitting from no-inventory stores. Less inventory means less of the mundane work associated with traditional stores, such as organizing and restocking shelves. Retailers will need new labor to staff their experiential offerings — and this is a great opportunity for store associates to upskill and/or try a new career path. The retail workforce will slowly begin to evolve, enabling them to focus their efforts on the customer experience in newer, more value-added ways.

Add cutting-edge retail technology like prescriptive analytics, radio frequency identification (RFID) tags for items on display, or assistive cobots to manage the simpler tasks that remain, and soon the role of the store associate will be invaluable to customers. Similar to the way in which a sommelier can select the perfect wine pairing, or a tailor can transform a suit, retail associates will spend less time reviewing and trying to interpret complex data reports, and more time on the store floor. This empowers them to meet customers’ growing expectations and becoming a highly valued resource.

Brick-and-mortar is not dead. It’s adapting, and the no-inventory model is just one element of the retail revolution. For retailers, letting go of inventory will improve finances and provide opportunities for employees to move into new roles. For customers, it sets the stage for the future of in-store shopping. It’s a new model I see gaining traction in the coming years.

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