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Wary of the economy, web retailers are likely to buy less holiday merchandise this year. In such a circumstance, it is imperative that they sharpen their strategies to coordinate price promotions with available inventory, advised Paula Rosenblum, managing director at Retail Systems Research LLC, a research and advisory firm. "Plan a pricing strategy, plan your inventory strategy, and make sure the two are in sync," she said.

Rosenblum noted that retailers who are worried about overbuying merchandise may experience high levels of out of stock problems. If that turns out to be the case, it will be even more important to take several steps to increase gross margins on merchandise sales, to help compensate for the loss of revenue. Retailers working with lean inventory levels should take a harder look at free shipping offers and how they will impact product sales, she also advised. Work with merchandise suppliers to apply the steepest promotional price discounts to products that will be available in the highest volume, she suggested.

"Work with merchandise vendors to figure out what your sacrificial lambs will be and how you can work together to maximize order fill rates," Rosenblum said. She suggested that arranging for some suppliers to ship heavily promoted products directly to customers could be a good option for maximizing both order fill rates and gross margins.

"We know there's a lot retailers cannot plan, and we don't know what the economy is going to really look like," Rosenblum acknowledged. "But merchants can plan for many contingencies. A retailer winner will do that now, to have a better holiday season," she concluded.

Article ID: 1106