Managing Inflation Risk in RetailLeveraging advanced analytics to weather the storm |
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Significant jumps in the price of crude oil, food, cotton, and other commodities are squeezing margins and eroding earnings. With a sluggish economy and skittish consumers, retailers cannot uniformly pass along price increases. Adding to the challenge, most retailers already pulled the traditional cost-reduction levers during the recession.
Feeling boxed in, they are now left searching for an escape from inflationary pressures. An emerging set of analytical capabilities focused on sourcing, pricing, assortment optimization, and inventory productivity may provide immediate relief.
Retailers are facing a set of challenges that require a new set of solutions to address them. Margin declines can no longer be offset by improvements in selling, general, and administrative (SG&A) costs and reduced inventories. Retailers will once again need to selectively employ a set of “go-to” levers that they have utilized in the past to manage costs in the short term, and a series of more-advanced levers to build a sustainable, competitive advantage.
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Managing inflation risk in retail
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