Wide Diversity of Products and Constrained Storage Space Place Severe Logistical Challenges on Many Retail Stores

Abstract

Retail shops are characterized by the wide diversity of products of different prices and sizes that require display to facilitate sales. The latter concept is important, and thus, place a constraint on the number of types of products that could be displayed and sold in a given shop. Thus, available display space at a retail shop constraint the types and number of products that could be retailed. But, there is an equally important concept prevalent in various types of retail shops that need to be considered. This comes in the form of the constraint on the number of items of a particular model and brand that can be held as inventory in the retail shop due to the diversity of products sold. Typically, the higher the diversity of products available, the fewer of each item that can be held as inventory. A storeroom in the retail shop would help partially solve the inventory storage problem, but these storage spaces are increasingly smaller in the modern concept of a retail space. Hence, to enable maximized chances at selling each product to each potential customer, running a retail business meshed intimately with a well-oiled logistic operation. Specifically, the shop owner needs to coordinate the replenishment of high-volume products on a regular basis to ensure sufficient stock to meet demand, while not holding inventory that could not be easily sold. This is a fine art in retailing as different preferences amongst customers of different locales meant that general guiding principles could not be developed to help select the preferred set of products to maximise sales. More importantly, the task of stock replenishment is easier for stores belonging to a franchise with centralized inventory storage at a warehouse. In this case, individual stores only need to order required items from the central inventory. But, the task is much harder for sole proprietorship store where the store owner faces the challenge of inability to ask for delivery of small volume purchase of particular items for replenishment, or the need to stock up large volume of popular products. Overall, a retail store may appear self-sufficient. But, it is not, as it is intimately tied to a logistical system that replenish items to help enable efficient flow of goods from the supplier to the consumer. Hence, operating modes and concept for a retail store needs to keep up with modern concepts and modes of logistical supply in order to strike a balance between volume of inventory at store, and the opportunity cost of keeping inventory.

Keywords: retail store, inventory, inventory replenishment, logistics