New software drives ‘true value’ for hardware store giant, including inventory reductions
True Value is optimizing its inventory levels and replenishment efforts with a new demand forecasting solution.
True Value, a Chicago-based distributor of hardware, built its reputation on learning how to anticipate customer demand. But when the company needed a more accurate way of replenishing inventory based on actual customer buying trends, particularly for highly variable categories like seasonal, weather dependent and novelty items, True Value embarked on a strategy to revamp its demand planning and replenishment processes.
By adding JDA Demand, True Value gained a single, accurate, enterprise-wide view of customer demand. More granular forecasting capabilities drill down to the hourly and item levels, driving more dynamic and variable demand categories. Previous systems would miss trend changes and the opportunity to adjust demand forecasts.
Since deploying JDA Demand, True Value has seen millions of dollars in inventory reductions, while sustaining an industry-leading first-time fill rate and improving turns on its inventory investment. With fewer stock-outs, True Value can deliver a better customer experience, leading to increased sales and satisfaction, according to the company.
“We needed a better way to predict demand more accurately,” said Lyndsi Lee, divisional VP of inventory and global sourcing, True Value. “JDA has surpassed our expectations and been a true partner, driving inventory reductions we can choose to reinvest as well as improving our ability to forecast demand.”
True Value plans to expand its JDA footprint this year with a replenishment planning module that will not only forecast demand changes more quickly, but also react and replenish faster, according to the company.
The deployment of the solution coincides with True Value’s overall growth strategy. In the spring, the company sold a majority stake to Washington D.C.-based private equity company ACON Investments. Through the deal, ACON Investments now owns 70% equity of True Value Company. Current True Value members kept 30% equity, and received a $196 million cash payout.
Retail industry loses jobs in June
Jobs in the retail industry are up over last year, but down from last month.
Retail industry employment in June increased by 50,200 jobs unadjusted over the same time last year despite a seasonally adjusted drop from May of 25,800, according to the National Retail Federation. (The NRF numbers exclude automobile dealers, gasoline stations and restaurants.) Overall, U.S. businesses added 213,000 jobs over May, the Labor Department said.
Economy-wide, average hourly earnings in June were up 5 cents over May and 72 cents from a year ago, a year-over-year increase of 2.7%.
“This is another solid, robust payroll increase that nicely closes out the second quarter and affirms a very strong economy,” said NRF chief economist Jack Kleinhenz. “It is consistent with how consumers feel about the economy and their personal finances. Nonetheless, while payroll gains should translate into increased spending in the coming months, if the trade war spreads it may become a turning point for consumer and business confidence that could affect spending.”
June’s monthly drop followed a revised monthly gain of 23,600 jobs in May, but Kleinhenz said the beginning of the volatile summer hiring season often brings large swings. Coupled with downward revisions to April and May figures, the three-month moving average in June showed a loss of 1,300 jobs.
June brought monthly gains in clothing and clothing accessory stores, which were up by 6,900 jobs, and non-store, which includes online, was up 1,700 jobs. Losses were concentrated in general merchandise stores, which were down 21,500 jobs; grocery and beverage stores, down 8,600; and electronics and appliances stores, down 3,700.
The Labor Department said the unemployment rate was 4%, up from 3.8% in May.
Survey: Holiday shoppers favor retailers with fast delivery
Retailers that offer same-day delivery are likely to have an edge over those that don’t during the 2018 holiday season.
That’s according to the third annual holiday survey by Dropoff, which found that over half of consumers are more likely to purchase gifts from retailers that offer same-day delivery during the holidays. In a related finding, cart abandonment due to slow delivery options for gifts is on the rise. Sixty-seven percent of consumers have abandoned a gift purchase during the holiday season for this reason (a 16% increase from last year’s surveys).
The survey also revealed the cost of gift deliveries that go wrong, with only 20% of consumers likely to purchase from a retailer again after a negative delivery experience. Also, regardless of who actually delivers the gift, be it a third-party delivery company or the retailer itself, consumers tend to blame the retailer for negative delivery experiences. Eighty percent of consumers feel it reflects poorly on the retailer if a gift arrives late, and 74% feel it reflects poorly on the retailer if a gift arrives damaged.
In other findings:
• Last-minute holiday shoppers are 78% more likely to purchase gifts from companies that offer same-day delivery compared to those who don’t.
• Seventy-one percent of consumers are “highly likely” to recommend a retailer to others after purchasing a holiday gift and having it delivered the same day.
• Eighty-five percent of consumers are more likely to purchase from a retailer again, and five times more likely to recommend a retailer to others, if their holiday gift purchase can be tracked in real-time throughout the delivery.
• Millennials are 118% more likely to have paid extra for same-day delivery on a gift. They’re also 48% more likely to purchase gifts from retailers that offer same-day delivery during the holidays (59% of millennials vs. 40% of non-Millennials).
•45% of luxury shoppers are likely to have purchased gifts in the last year that were delivered same-day. That is 105% more than non-luxury shoppers. They’re also 23% more likely to purchase gifts from retailers that offer same-day delivery during the holidays (58% of luxury shoppers vs. 47% of non-luxury shoppers).
• Nearly a third (31%) of consumers have purchased a gift in the last year that was delivered same-day. Additionally, customer loyalty has shown to increase beyond the holiday season after experiencing same-day delivery for a gift. 75% of consumers are highly likely to shop with a retailer again after purchasing a gift that arrived same-day.
“Going into the 2018 holiday shopping season, it’s never been more important for retailers to understand shoppers’ needs when purchasing gifts,” said Sean Spector, CEO of Dropoff, a same-day, last mile delivery service. “Consumers plan to do more last-minute shopping than ever and have high expectations for quick delivery options to accommodate.”