Evan Schuman's StorefrontBacktalk

And remember, this is Macy’s, which has pushed faster and farther into merged-channel than most chains have. Macy’s already ships E-Commerce orders from stores—specifically, whichever store is most overstocked with a product (and a single unit that’s not in the store’s assortment is sort of the ultimate overstock). Macy’s has the enterprise-wide view of inventory and the back-room people in place to do the shipping. All the systems are in place, and it’s still a monumental pain.

The best approach? “We’ve all got to get smarter about how we measure demand,” the Macy’s exec said.

Michelle Tinsley, the director of transactional retail at Intel, said this problem is impacting a huge range of retailers, and it needs to be dealt with quickly.

“In a perfect world, I think what would happen in that example is the return that comes back is accepted, because the customer views that brick-and-mortar location as today’s face of that retailer, so they need to uphold that brand image and take the return,” Tinsley said. “But in this merged world, (the chain needs to) allow any location in that nationwide retailer to see those shoes now bonused back into inventory and to then sell them very quickly and ship it from that location. So even though it was returned to a brick-and-mortar store, let it be seen in those warehousing systems so that the next order that comes in over the Internet or from a store in Cincinnati gets placed from that store in, say, California.”

Tinsley argues that this problem is one manifestation of the old way of retailers looking at problems.

“I think you need to flip it. Instead of saying, ‘I’ve got the inventory in the wrong place,’ say, ‘Well, I’ve just got to open up the inventory to where the next demand signal is coming from. And if that next demand signal is a pair of boots and it’s been returned to L.A. but now you’re getting a new order out of Rochester, N.Y., ship the boots from LA to the customer in Rochester, N.Y., instead of fulfilling it out of the warehouse. It’s about creating that visibility so that we really focus and design the system to point to the demand signals and where the customer is at and worry a little less about the inventory controls and the physicality of where the inventory’s at.”

Tinsley discussed this and related issues during Part Two of this week’s StorefrontBacktalk Radio segment.