Basic Inventory Optimization Program Case Study

Client: An $800M fast-growing, national specialty apparel retailer

The challenge

This 300-store national specialty apparel retailer had a homegrown replenishment system that was not providing acceptable business results; they could not continue to manage their business and stay in stock with the homegrown tool. PwC Canada’s Retail Consulting Services practice was hired to explore alternative vendor solutions and technology while avoiding the pitfalls that led to prior failed software implementations at this retailer.

Our approach

PwC Canada's Retail Consulting Services worked to increase in-stock rates on key basic items to an average of 90% + while reducing overstocks. This was accomplished by:

• Evaluating the need and fit of a best-of-breed replenishment solution
• Determining fit and sequencing with other company initiatives already scheduled
• Establishing standards for items to be included in the replenishment process
• Halting plans to spend $1 million on other systems, which Retail Consulting Services proved would be addressing symptoms and not the cause of poor inventory performance
• Reviewing alternatives and selecting/implementing best-of-breed replenishment software solution
• Designing best practice replenishment processes to better enable the new toolset
• Modifying the current management process to include a focus on replenishment performance

The result

The retailer improved overall management of inventory, increasing the level of investment in productive merchandise. The net financial impact was $18 million in additional gross margin from reduced out of stocks over a three-year period.