In the midst of the pandemic, consumers bought discretionary items in record numbers. For months, sweatpants, cookware and other products flew off the shelves. Retailers responded by stocking up on merchandise.
But then, with inflation and supermarket prices rising, shoppers stopped opening their wallets as often. The result was an excess of inventory in the back rooms and warehouses of retailers around the world.
As companies deal with this excess inventory, they rely on various strategies, such as discounts, to sell products to consumers who would otherwise gather dust. But there’s another, better solution that retailers are turning to to get rid of excess inventory: a technology feature known as the “endless aisle.”
I spoke with Rick Berger, president of NewStore, which provides an omnichannel platform as a service to retail brands around the world, about why so many retailers are offering “endless aisle” capabilities.
Gary Drenik: How do you define “endless runner”?
Rick Berger: Endless aisle technology allows brick-and-mortar retail brands to offer a virtually unlimited selection of products without having to physically stock the items in their stores. For example, an item may be out of stock or unavailable in one location, but an associate can purchase it and have it shipped to a customer at another store or fulfillment center, seamlessly during the checkout process. In short, it’s a great way for retailers to “save the sale” without stocking large amounts of inventory. Case in point: across our customer base, brands saw up to a 15% increase in store GMV in an endless aisle. These are sales that might have been lost if there wasn’t a simple way to sell inventory across the entire company.
That’s why the number of retailers offering endless runners has exploded recently. The Omnichannel Leadership Report we published in October, which was an investigation of large-scale mystery shopping across more than 300 brands across the US and Canada, found that 54% of stores are able to carry inventory from other locations, a 315% increase from in relation to 2021.
Drenik: What changes in the retail industry are responsible for driving this surge in interest?
Berger: There are three trends driving the increase in the endless runner. The first is excess inventory from 2022 onwards. This is perhaps the biggest driver of endless aisle adoption. Excess inventory has accelerated the need for retail brands to sell products from any store, warehouse or distribution center. This glut of merchandise has created consequences ranging from storage issues to delays in distribution and tied up cash flow. To avoid these headaches, retail brands are empowering store associates to sell merchandise from outside the specific store location where they are physically located.
Number two is retailers downsizing their stores. The root of this change is the fact that retail vacancies have fallen in all sectors, which has caused rental prices to rise. Large stores that carry the entire assortment of a brand’s product line are no longer cost-effective. As a result, retailers have realized they can do more with less with the right technology in place.
Finally, shoppers are increasingly sophisticated and digitally empowered. According to recent research by Prosper Insights & Analytics, 30% of US consumers across all demographics are shopping more comparatively online. When consumers buy, they do so with purpose. Brands need to be able to offer them the products they want anytime, anywhere to stop them from going elsewhere.
Drenik: Tell me more about how the endless aisle helps retailers sell excess inventory.
Berger: For retail brands, the goal is to empower your store associates to sell more. The way to do this is to allow them to access inventory from any location or distribution center – directly from the mobile point of sale, in real time, while interacting with a customer in the store.
By providing store associates with access to the full catalog of products, retailers reduce their dependence on discounts and profitably reduce inventory without friction for both the associate and the consumer.
The endless aisle can also help retailers reduce their inventory costs, allowing them to offer a wider range of products without having to pay for storage and handling. This is particularly helpful in the current economic climate, where rising inflation and supply chain challenges have made it more difficult and expensive for retailers to keep their inventory levels high.
Drenik: Is it a consumer-facing feature and what do buyers demand? Who benefits most?
Berger: It benefits retailers and consumers alike. For retailers, the benefits are more tangible, as it gives them the ability to access and sell inventory from any store or warehouse, allowing them to move more merchandise at full price more quickly and easily than ever before.
For consumers, the benefit is less direct – they aren’t necessarily asking for it, but they expect it. A survey of nearly 600 US consumers we conducted in 2021 found that 67% of shoppers expect store associates to be able to sell a product even if it’s not available in the store and have it shipped to them.
At the end of the day, the endless aisle gives consumers the ability to get exactly what they want from any store, even if the desired items are out of stock. For example, imagine you’re shopping for a wedding outfit and you walk into a specialty store. That store might have the suit you want on the shelf, but it might not have the matching shirt, tie, socks, or shoes. The endless aisle allows an associate to order all the other items you want on the spot and have those products shipped to your home overnight.
Drenik: Is it a niche retail term or does it have broader appeal to the general business world?
Berger: At NewStore, we provide endless aisle resources specifically for retailers, many of whom are apparel or accessory brands. But as a resource, the endless runner is applicable in a variety of industries, from hardware and home furnishings to electronics and appliance retailers and health and personal care stores. Essentially, any brick and mortar retailer can benefit from this technology.
At the same time, the Prosper Insights & Analytics survey found that 22% of US consumers are shopping more online across all industries. Endless aisle features like ours allow retailers, regardless of industry, to capture more of that desire to shop online and extend that experience into the store.
Drenik: Where does NewStore fit into all this?
Berger: At this point, retailers have known for years that consumers want to shop from brands anytime, from any channel – and have a consistent, frictionless shopping experience. NewStore provides the software that allows retail brands to deliver this unified experience to consumers.
We’ve already talked about the endless aisle capability that NewStore offers, but our omnichannel platform also provides retail brands with features such as clientele and remote selling, store fulfillment, mobile point of sale, native consumer apps and inventory management. Endless runner in an integral piece of this omnichannel puzzle.
All of this allows our customers, who include Burton, GANNI, G-Star RAW, Marine Layer, Outdoor Voices, Roots Canada, Scotch & Soda, UNTUCKit and Vince, to easily deliver amazing shopping experiences that store associates and consumers love. We are proud of what we build and the value we create for our customers.
Drenik: Thank you, Rick, for your time and thoughts on the endless runner topic.