Believe it or not, many consumers have already started back-to-school (BTS) shopping in stores. According to the National Retail Federation, total consumer spend is expected to reach a new record of $135.5 billion when college students are included – about $25 billion higher than last year.
Some of the highest spending categories include electronics ($38 billion), clothing ($33 billion), and dorm/apartment furnishings ($13 billion).
This spending spree can last all the way through the end of September. Brands looking to capitalize on this record spending need to be prepared for the rush – starting with transportation.
Back-to-School Sales & Gross Profit Opportunity
Many retailers have recently implemented strict delivery compliance benchmarks to grade their vendors. Continually failing to meet these benchmarks can lead to hefty fines for vendors. But even more costly is the shelf space lost when deliveries fail to be on time.
The table below demonstrates the gross profit opportunity available to brands who can meet retailer’s expected delivery performance standards.
|Annual Revenue||On-Time Delivery Performance||Gross Profit|
*This example assumes the $1M company operates at a 45% gross margin.
In this example, the difference between hitting retail suppliers’ average delivery performance (77% on time) and hitting the performance retail partners expect (95% on time or better) is $81,000 in pure margin.
In addition to tanking their gross profit, brands that continually fail to meet standards are at risk of damaging their retail relationships and hurting their chances of growth.
|2023 Expected Revenue||Weekly Revenue||Average Non-Edible Out of Stock Rate (as of July 2023)||$ Lost to Out of Stock Weekly|
|$135.5 Billion||$2.6 Billion||6%||$156 Million|
Based on IRI data, the chart above tracks in-stock levels at leading U.S. retail stores versus total domestic annual sales data for 2023.
Using Zipline expert calculations, the revenue opportunity cost left on the shelf in one week would be $156 Million. This is an extremely conservative estimate, as the calculations assume that demand for BTS items would remain the same throughout all of 2023. During the BTS season (mid-July through the end of September), this figure will likely be MUCH higher due to increased demand.
That $156 Million represents the opportunity to win over new customers by keeping your committed shelf space stocked and win expanded shelf space when retailers need to fill gaps left by non-performers.
This is a top line revenue opportunity gained simply by meeting your retail and distribution partners’ fulfilment expectations. Keep in mind that 66% of CPG buyers stated they have stopped working with suppliers over delivery issues.
That shelf space can be yours.
Value of a Specialized Logistics Partner
The most forward-thinking brands are looking at their retail-optimized supply chains differently.
No longer is logistics an expense. Vendors that view logistics as an investment, on which they can eventually see a return, stand to fare better. They can expect to improve organizational performance and subsequently their retail relationships, which can be vital in unlocking untapped growth.
The best logistics providers typically take a consultative approach to service. This looks like locating improvement areas and making suggestions that can increase performance, lowering costs in the process. With a deep understanding of complex supply chain functions and specialized industry knowledge, the best providers can help enterprises better understand how their operation needs to perform to meet customer demand and cut costs in the process.
A logistics provider equipped with the latest shipping technology can make distribution network suggestions that can reduce overall spend and improve on-time percentages, like consolidation programs or warehouse reconfigurations.
Win the Back-to-School Season
Retail logistics solutions consultants at Zipline Logistics can help brands master their most important customer relationships.
We believe in creating seamless partnerships with our customers. That means making your goals our goals and working to meet them. We help even multibillion-dollar companies lock in the right capacity partners to achieve the best possible freight outcomes and uncover new savings potential.
Interested in learning more about what we can do for you?
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