Dax Dasilva is the CEO of Lightspeed Commerce.
getty
The traditional model for inventory management is like a bike ride on a sandy beachfront. It’s impractical. It’s slow. And while you might get from point A to point B, things will be lost en route.
With escalating customer demands, I see endless aisle as a way for smaller retailers to compete. Endless aisle boils down to letting consumers order from a virtual store while shopping in person, helping bridge the gap between in-store and online and removing the limitations of physical inventory.
As someone who leads a commerce platform that provides independent retailers with solutions like inventory management, I've seen how, with the right strategies, these types of tools can combine into an endless aisle model and help businesses compete with big-box stores’ warehouse-style product offerings.
To effectively leverage endless aisle solutions, companies can look to establish direct connections between high-value brands and retailers through a streamlined supplier network. Additionally, implementing robust inventory management systems can help optimize distribution channels and ensure efficient order fulfillment.
Below are some actions and anticipated trends when it comes to incorporating endless aisle into your small business.
Navigating The Inventory Challenge
For years, brands and independent retailers have struggled to run in-sync systems. As a result, small retailers have historically had trouble competing with big-box stores' inventory. In a 2022 survey, 91% of SMB retailers said they feel that larger companies have an advantage when it comes to procuring inventory.
Covetable brands are often reluctant to work with small or medium-sized businesses because they lack the numbers and distribution of bigger chains. Smaller retailers are frequently left with an impossible scenario—whether to acquire more merchandise and risk having excess inventory, or being cautious and potentially disappointing customers. I believe a balance needs to be found to meet customer demand, prepare for seasonal shifts and manage inventory effectively.
Outside of the challenging need for additional space, excess inventory also puts retailers at greater risk of loss due to shrinkage. According to the National Retail Federation’s "National Retail Security Survey 2022," total annual shrink reached $94.5 billion in 2021. Many retailers are locking merchandise, which is a big inconvenience for customers. These loss-prevention methods rob consumers of time and positive experiences, with the same study finding that 15% to 25% opt to avoid the hassle and walk out the door.
Overall, it's important for small businesses to find ways to directly connect suppliers, brands and independent retailers. For example, having access to suppliers’ full digital catalogs can allow deeper collaboration between supplier, brand and customer. This integration makes it so stores can offer a complete range of products as well as allow for real-time visibility of inventory.
Making Endless Aisle Work: Real-World Scenarios
Sophisticated value-adds like drop shipping, same-day delivery and personalized recommendations are a few of the opportunities typically relegated to bigger corporations that small businesses can take advantage of once they have systems in place for endless aisle.
As an example of a larger retailer benefitting from endless aisle, popular menswear e-tailer Bonobos maintains low in-house inventory by having their stores essentially act as showrooms; customers can’t leave with physical merchandise. Instead, shoppers access a full array of designs, sizes, fits and colors and staff service them like concierge. Once you find that perfect fit, you leave hands-free and receive the item at your doorstep.
Best Buy is also very successful with endless aisle technology. The electronics giant recently embraced an omnichannel approach to address supply chain and customer service challenges. They use a five-prong approach to leverage tech: An expanded product range, in-store kiosks, fulfillment options, online-offline integration and product reviews.
Looking To The Future: Accessibility For All Retailers
As can be seen, game-changing technologies like endless aisle are first deployed by larger enterprises with the resources and bandwidth for developing, testing and fine-tuning them. The benefit of having enterprises experiment with these technologies first is that best practices and use cases can be determined and scaled for the broader industry.
As smaller, independent retailers look to adopt these technologies, it is important to remain focused on the core objectives at hand. These smaller businesses need to define their goals, whether it's improving efficiency, enhancing customer experience or increasing sales. Then tailor the adoption of available technology to suite those needs. Once implemented, these newly implemented systems should be monitored closely, keeping track of key metrics to measure their impact on the business and then adjusted as needed.
Eventually, though, for an endless aisle network to serve thousands of independent retailers, I believe it will essentially need to become an easy-to-tailor, "out-of-the-box" solution that connects business with a network of top brands, manufacturers and products. Of course, that’s a tall order.
Unlike a big-box store that includes only the brands they sell in their customized endless aisle network, an out-of-the-box version would need to meet the collective needs of many different store owners, across many different sectors and geographies.
Taking Inventory
Once the challenges of innovating an "out-of-the-box" endless aisle network are met, it will likely manifest in a variety of ways. We’ll likely see the application of lessons learned from larger enterprises, such as kiosks at Best Buy or the showroom approach at Bonobos, allowing customers to view and touch endless products at smaller retailers without sufficient space to stock the merchandise.
But first, the hard part: Innovating the technology to connect independent retailers and brands. Endless aisles’ potential is enormous, but for it to be truly transformative, I believe that all appropriate parties need to be connected within one network: Brands, suppliers, retailers and, ultimately, consumers. Therefore, it's important to find ways to incorporate tools that can facilitate these connections.
Even as endless aisle begins to give you the ability to wield the same tactics as big brands, though, make sure to maintain those elements that create that one-of-a-kind, localized appeal.
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