A SPECIAL SUPPLEMENT TO DC VELOCITY S-9
That journey has been more of a marathon than a
sprint—one the company has been engaged in over the
past four or five years. And it is one that continues. “Our
omnichannel story is still being written,” says Tannenbaum.
“It continues to evolve for us.”
For Vitamin Shoppe, the decision to move toward imple-
menting a broad omnichannel strategy grew out of several
factors. It had experienced robust organic growth—the
retailer of vitamins, minerals, sports nutritional supple-
ments, and such now operates
more than 675 stores—and had
made a major commitment to
direct-to-consumer sales. That
growth created constraints for
its existing fulfillment opera-
tions and its inventory manage-
ment process.
Before the company began
to focus on omnichannel, it
already had successful store and
e-commerce businesses. “What
we lacked was a precise and
frictionless way to serve our customers seamlessly across all our
channels,” Tannenbaum explains.
What the company did have, and which proved to be a
major asset, was abundant data on its customers. Nearly
90 percent of the company’s sales are from customers that
take part in its loyalty programs. As a result, the retailer has
a substantial amount of information on how its customers
reach the company and shop, and what they purchase.
“The data began to tell us that customers are going to want
to purchase anywhere, meaning they might want to buy in
a store, on a desktop, on a tablet, through our call center,
you name it,” Tannenbaum says. “The question for us was
whether we needed to be able to fulfill orders with the
same flexibility and speed. We arrived at the answer that we
do. We want to be able to provide the best possible service
at a reasonable cost.”
A FOCUS ON THE DETAILS
But Vitamin Shoppe would have to overcome a number of
challenges to get there. Its legacy catalog system could not
provide the seamless service required. Supply chain visibil-
ity and inventory decision-making capabilities needed to
improve.
“Our performance metrics were good, but they weren’t
great,” says Tannenbaum. “They were not good enough for
the speed and unprecedented merchandise availability we
needed. We lacked the basic business processes to serve
our customers wherever and however they wanted. We had
high variability and inconsistent execution at nodes across
the supply chain.”
All of that has changed dra-
matically for the better. But get-
ting there required a large num-
ber of critical steps.
At the outset, Tannenbaum
says, the company decided it
would focus its omnichannel
development on three specific
areas: inventory planning and
forecasting, distribution and fulfillment, and business processes
and the supporting IT systems.
Tackling the inventory issue
was perhaps the top item on
the agenda, with the twin goals of offering customers
“unprecedented merchandise availability” while reducing
total inventory networkwide. The company offers 22,000
stock-keeping units (SKUs) overall, and about 8,000 in each
store. So it was also crucial to develop tools to ensure that
customers, even those in the stores, had easy access to the
full array of products.
As a result of steps taken over the past couple of years,
the company has come a long way, sharply reducing
inventory throughout its network, increasing inventory
turns, and, at the same time, improving in-stock availability
across its businesses. Five years ago, Tannenbaum says,
store in-stocks ran at about 90 percent, nearly 20 percent
of online orders were back-ordered, and inventory was
turning about three times a year—while performance was
good, there was room for improvement.
Further, Tannenbaum says, the company identified specific supply chain areas ripe for improvement. For example,
store replenishment could have been faster, and with the
