SUPPLY CHAIN

Boost Holiday Sales With a Strong Supply Chain

BY CSA STAFF

By Steve Sensing, VP, Ryder System

Last year, 37.3% of traditional “Black Friday” consumers began shopping between 8 p.m. and 11:59 p.m. on Thanksgiving Day. Shopper traffic over the two-day Thanksgiving Day and Black Friday period at retail outlets totaled more than 1.07 billion store visits. Sales during the two-day period were $12.3 billion, and online sales grew an explosive 18.5%.

After seeing the financial benefits of opening earlier, more retailers are expected to open their doors on Thanksgiving Day to get a jump on their holiday sales. This year, forecasters expect sales over the two-day period to grow 3.9% over last year.

With millions of people lining up – or logging on – for deals, retailers know the success of Black Friday rests on a strong supply chain. Preparations for Black Friday begin long before customers get in line, with supply chain managers putting their strategies in motion months before the “biggest shopping day of the year.”

With the start of the holiday shopping season kicking off Thanksgiving Day and lasting through Cyber Monday, a weak supply chain could spell disaster for a retailer’s sales. The effects of the extended beginning to the holiday shopping season can be seen in the plans each supply chain manager has formed.

So how can you tell if you have a supply chain that’s ready?

Peak planning is one of the most critical components to a strong supply chain. Managers begin their preparations by assembling and training a team that is focused on preparing for holiday demand and capacity. Cross-training new team members on multiple skill sets give managers the ability to position new people based on seasonal shifts.

With the team in place, managers need to make sure the distribution center is set up for productivity as inventory volumes surge. Fast-moving products should be stocked closer to operating areas to reduce travel distance. For products with different order velocities, a slotting plan should be developed to help ramp up fulfillment for seasonal products.

As volume spikes, supply chains will see more full-pallet or full-case replenishment orders. Setting up the distribution center to support cross-docking will save time allowing the workforce to move the products through the facility and build orders faster. Too many operations continue receiving, putting away and picking orders the same way they do during non-peak periods.

One of the big trends we’ve seen over the last three years is the ability to have flexible order processing capabilities. This ties to packing products in different ways and having a build-to-order supply chain, which is one of the key capabilities in consumer goods and consumer electronics. A build-to-order supply chain allows retailers to adjust order patterns quickly to capitalize on changing trends.

Managers also have to plan around the driver shortage and capacity constraints in the trucking industry. Just as distribution center teams are being built, drivers must be in place to haul the products to the stores. This highlights one of the benefits of having a dedicated fleet, as it ensures drivers and capacity are available during peak periods.

A strong supply chain has the flexibility to handle all of these items. Having a successful Black Friday begins with having the end-to-end capabilities that are able to adjust and deliver results.

With a strong plan and team in place, supply chains can be ready for the demands that come with the extended beginning of the holiday shopping season. Retailers with solid plans will kick-off their holiday season with confidence and carry strong sales through the end of the year.

Steve Sensing is VP at Ryder System. He can be reached at 615-649-3304 or [email protected].


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FINANCE

Wal-Mart teams up with Green Dot to offer low-cost checking accounts

BY Dan Berthiaume

Bentonville, Ark. – Wal-Mart Stores is moving deeper into financial services. The retailer is launching an exclusive checking account product, called GoBank, with Green Dot Corp., a prepaid-cards specialist. Wal-Mart already offers a prepaid debit card, credit card, check cashing and money transfers.

The new service, offered through Green Dot’s banking unit, is linked to MasterCard debit cards. Designed as a low-cost alternative to traditional bank checking accounts, Go Bank has no fees for overdrafts or bounced checks and no minimum account balance.

In other distinctions, GoBank uses “proprietary” underwriting techniques to allow almost any consumer who passes ID verification to open an account account minutes after purchasing a starter kit for $2.95. The product will be available in most of Wal-Mart’s U.S. stores by the end of October.

“Wal-Mart customers want easier ways to manage their everyday finances and increasingly feel they just aren’t getting value from traditional banking because of high fees,” said Daniel Eckert, senior VP of services for Wal-Mart U.S. “Adding the GoBank checking account to our shelves means our customers will have exclusive access to one of the most affordable, inclusive and easy-to-use checking accounts in the industry. GoBank gives our customers yet another option as to how they manage their money.”

The new service will have a monthly membership cost of $8.95, which will be waived with a qualifying direct deposit of $500 per month. The accounts will be insured by the FDIC.

GoBank includes instant person-to-person payments and pay-anyone bill pay. It also features budgeting tools such as “Fortune Teller,” which crosschecks the price of an item with a customer’s planned income and expenses, and if they can’t afford it, they’ll be advised in real-time to pass on the purchase. Customers can also instantly send money to each other at no charge via email or text message.

In 2007, Wal-Mart ended attempts to secure a federal bank charter after facing steep opposition from the banking industry. However, the company has since launched a range of financial services that it can offer without a charter, and is now using a partnership with Green Dot to offer checking without a charter. GoBank is the first federally insured bank account Wal-Mart has offered.

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FINANCE

Bed, Bath & Beyond beats Street on profit, sales in Q2

BY Dan Berthiaume

Union, N.J. – Bed, Bath & Beyond Inc. reported net earnings of $223.95 million in the second quarter of fiscal 2014, down 10% from $249.3 million but still ahead of Wall Street projections. Increases in both interest expense and selling, general and administrative expense helped reduce net earnings.

Net sales were approximately $2.94 billion, an increase of 4% from net sales of approximately $2.82 billion. This result also topped Wall Street expectations. Same-store sales rose 3.4%. Same-store sales results did not include Cost Plus World Market, but will include Cost Plus World Market beginning in the third quarter. Same-store sales results also exclude Linen Holdings because it represents non-retail activity.

As of Aug. 30, the company had a total of 1,506 stores, including 1,017 Bed Bath & Beyond stores, 269 stores under the names of World Market,Cost Plus World Market or Cost Plus, 92 Buybuy Baby stores, 78 stores under the names of Christmas Tree Shops, Christmas Trees Shops andThat! or andThat!, and 50 stores under the names of Harmon or Harmon Face Values.

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