Christian retailers and their suppliers could find new ministry and new money in improved cooperation and refined business models using “Scan-Based Trading (SBT).”

DATA PARTNERS

The consignment strategy has fallen from grace in recent years, but SBT promises benefits for partnering retailers and suppliers by changing retailer-purchased inventory to vendor-managed inventory (VMI).

Scan-Based Trading means suppliers retain ownership and inventory-management responsibility for products until retailers actually sell it. In Vendor-Managed Inventory suppliers also typically take on shrinkage and damage-loss until products are scanned at check-out, relying on accurate retailer sales and inventory data.

Retailers benefit from reduced inventory holding costs and more focus on sales, service, and marketing, giving them stronger influence in vendor relationships. David Lewis, Baker Book House marketing VP, said the VMI idea is attractive, but the challenges are significant.

“[Christian] store systems with code written many years ago might struggle to work within such a system,” he said. “The often sloppiness of inventory accuracy is another challenge. Shrinkage and skimming contribute to the accuracy issue.”However, Lewis said even with the challenges Baker has found on a very limited basis that “being able to help manage our inventory within a retail store increases sales and profit for both the publisher and the retailer.”

Kempton Mooney, Nielsen Book’s senior director of research and analytics, said Nielsen’s BookScan data-collection and reporting services are supporting some VMI partnerships between larger publishers and retailers.Publishers know their products and marketing very well, he said, and retailer data not only helps optimize inventory and supply chain efficiency but also when combined with other retail sales data reveals clues about consumer preferences and shifts that contribute to better product development.

Most publishing houses, though, have fewer sales reps on the road to visit stores, and suppliers don’t always have the needed inventory and analytical skills or capacity to implement VMI.

MORE THAN INVENTORY

The Parable Group’s Business Intelligence Manager Erik Ernstrom said the company’s ParableConnect division is developing new hybrid tools that will give retailers and suppliers data-driven assistance that goes beyond inventory. Tools also could boost supplier visibility for store-specific or group data to better manage store inventory. ParableConnect, which also is the third party service provider for CBA’s industry best-seller lists, could step in where supplier sales reps have stepped out.

“ParableConnect would let the vendor do digitally what they used to do physically when sales reps visited stores,” Ernstrom said, enabling virtual VMI.

Additionally, robust data collection from other retail metrics, such as transaction size, product assortment, time on shelf, and historical comparisons help reveal clues to sales and operational issues that can be corrected.

Parable Group President Steve Potraz said the company offers annual reviews to analyze key sales, inventory, marketing, and customer metrics. In one case, average transaction comparisons to the previous year and other stores helped reveal store merchandising and sales deficiencies that were addressed to bring sales back up, he said.

Kent Godwin, Salient Management Co.’s VP applications, pointed out in his recent Industrial Distribution article that VMI gives suppliers new data, such as dates, days of the week, and time ranges, plus new consumer demographic data. This data could drive more effective promotions and profitability, he said.

Suppliers could also address systemic issues, such as correct inventory, co-op ad support based on buy-in, or paying on actual end-consumer purchases.

-Eric Grimm