Evan Schuman's StorefrontBacktalk

Put this one under the “no good retail deed ever goes unpunished” category. When chains listen to their customers and create localized store inventory, and then they listen more and accept online returns to any store the shopper chooses, they run into inventory train wrecks. Those Gomez Addams train crash moments occur when a shopper returns something—let’s say a pair of shoes—to a store that happens to not have that SKU in that store’s localized inventory.

Problem #1: Shoes have an extremely short shelf life. At the end of that shelf life (“that shoe is sooo last month”), the shoe is typically priced at a steep discount. Problem #2: Stores can’t sell one or two products. The display unit would represent half of all inventory. So, again, that orphaned product goes on steep discount.

Problem #3: The store could ship that shoe to a store that does have that SKU in its inventory. But you then have the cost (hard out-of-pocket shipping costs as well as labor to prep the product on both ends) and time (the multiple days involved in shipping) delays, and you’re still fighting against that extremely short shelf life.

“For apparel retailers, this problem has no good solution, even if there were a limitless budget, as time to market is a challenge,” said an IT exec with Macy’s. “Shoes, for example, typically have a shelf life of 12 weeks before the first clearance markdown. Some photo and creative workflows take four to six weeks, so unless Macy’s gets assets from the vendor, we’re racing to get our product on the site before it goes on permanent markdown.”

This problem is also not limited just to stores that, given the nature of customers, don’t stock a particular SKU. Sometimes that SKU is simply sold out, which gets you back into the “we can’t sell just one product” problem.

“We’re having the darnedest time with merged-channel returns. Biggest issue is that store returns are leading to onesie-twosie items at the store that takes it back. That store has to

either take a huge markdown on the item (counts against their margin plan) or cross ship product to a store that carries the item at retail price. This is a big headache that is made worse by the fact that we’re doing fulfillment from our retail stores,” said the Macy’s IT exec. “In my opinion, cross-channel item congruency is the biggest headache for retailers. It leads to issues in item availability, such as that you can’t sell store items on the site that aren’t properly attributed (description, price, photos, etc.), and then returns, planning, allocation and so on.”

And remember, this is Macy’s.