Here’s some data on a major U.S.-based retailer used an example in The Halo Effect:
According to the report of independent industry analyst, Alex. Brown & Sons, during the early 1990s, “Qual-Mart” did these things:
- Installed point-of-sale terminals in its stores, which provided better information on sales by item and improved the inventory planning process.
- Expanded central buying to 75 percent of its merchandise, helping to reduce the costs of procurement.
- Modernized its inventory management and thereby significantly improved its “in-stock position.” One result: better management of seasonal inventory, boosting Christmas and Halloween sakes by 60 percent.
- Conducted physical inventory counts more frequently, not just once at year-end, resulting in greater accuracy and efficiency.
- Reduced its expense levels as a percentage of sales.
- Improved its merchandise assortment to match current demand trends, helping to raise sales.
- Installed a toll-free customer service number which led to a sharp improvement in customer satisfaction.
- Implemented a sophisticated client/server technology that led to better merchandise management and savings of $240 million.
Thanks to these many steps, “Qual-Mart” saw an improvement in inventory turns–that is, how many times in a year it sold its inventory, a key measure of retailing efficiently–from 3.45 in 1994 all the way to 4.56 in 2002. That’s a jump of 32 percent, not bad at all.
Then the book asks:
Would you say “Qual-Mart” improved its performance?