Founded in 1977, The Vitamin Shoppe is an American omnichannel retailer selling nutritional supplements, natural beauty products, and more in their brick-and-mortar locations, through their Vshoppe app, and on their website. The Vitamin Shoppe offers an assortment of their own brands and multiple third-party lines encompassing more than 6,000 SKUs per store and over 10,000 SKUs online. In total, The Vitamin Shoppe’s centralized planning team manages around 4.5 million goods flows.
The Challenge: Omnichannel Retail with Frequent Promotions and Assortment Changes
The Vitamin Shoppe is constantly seeking to evolve as an omnichannel retailer. Both online and in stores, The Vitamin Shoppe gives their customers multiple options for how items can be purchased, including one at a time, in bulk, or by subscription. Their previous planning tools did not provide support for managing these different demand patterns.
In addition, The Vitamin Shoppe strives to delight their customers by continuously refreshing their assortment and offering great deals. From a supply chain perspective, this means planning for and continuously adapting to changing demand in each store and in their online channels.
“We need to quickly react to changes in the business – whether that is a change in the supply chain network, selling channels, or new ways to deliver to our customers,” explained Steve Finkelstein, Senior Director of Merchandise Planning and Inventory for The Vitamin Shoppe.
Despite a strong desire to innovate and implement new processes to overcome these challenges, the central planning team found themselves limited by their existing tools. “Our previous systems only allowed the team to focus on our top-selling SKUs, which left a lot of opportunity for sales growth on the table, especially knowing how different each store’s sales are,” said Finkelstein.
The Vitamin Shoppe began their search for a solution that could help scale their omnichannel strategy while effectively managing the frequent assortment changes and promotions.
After internal review, The Vitamin Shoppe determined that they needed a system that could:
- Accurately handle the forecasting of frequent promotions and assortment changes
- Manage omnichannel inventory optimization
- Allow for exception-based management
- Give the team ownership of the system for fast innovation and implementation of new configurations without coding
Results: Accurate Omnichannel Forecasting and Inventory Optimization
Results at a Glance
- More accurate forecasting of both baseline demand and promotional uplifts per SKU and store/channel
- Highly automated replenishment with less stock-outs and over-stocks
- Omnichannel inventory optimization, including virtual ringfencing
- An empowered planning team that can implement innovations and continuous improvements without waiting for approval of change requests
Despite several unexpected roadblocks during the early days of the project, including the impact of COVID-19, RELEX completed the implementation on time, within their 8-month time frame.
Previously, The Vitamin Shoppe had to use chain-wide promotional uplifts based on product category. With the RELEX system, they are now forecasting promotional uplifts on the product and store/channel level, accounting for the impact of price discounts, duration of the promotion, and promotional displays. The Vitamin Shoppe now has a greater level of insight into how products behave during promotions, allowing the team to more accurately place orders.
“RELEX’s ability to drive promotional forecasts using historical, store-SKU-specific events was a major driver for us in selecting their product. I believe it to be the number one opportunity for both increasing sales and reducing inventory at The Vitamin Shoppe,” said Finkelstein.
Similarly, RELEX has improved The Vitamin Shoppe’s ability to manage their new product introductions. The system automatically identifies reference products based on product attributes, such as brand and form, to improve demand forecast accuracy for newly introduced items. The system is also able to use data on previous product launches to model the behavior of product introductions, including those that follow a pattern of strong sales for the first few weeks and then a settling of demand at a slightly lower level. RELEX also helps The Vitamin Shoppe perform controlled ramp-downs of discontinued products to avoid residual stock.
Additionally, the RELEX system has significantly improved The Vitamin Shoppe’s ability to optimize inventory in their omnichannel setup. An important example is their capability to “virtually ringfence” inventory in distribution centers to secure their ability to meet online demand—particularly that of subscription-based orders from their most loyal customers. “We would prefer to have the inventory where we expect a guaranteed sale vs. shipping it to a store and hoping that it sells,” explained Finkelstein, adding, “[Ringfencing] was a key requirement when evaluating what software to go through.”
Occasionally, online customer orders must be fulfilled using inventory from both of The Vitamin Shoppe’s distribution centers (“split shipments”). Further complicating forecasting and replenishment, customers can place backorders through the website, claiming inventory before it reaches the DC. By attributing these orders to the DC from which they would ideally have been fulfilled and for the day they should have been shipped, the RELEX system ensures the accuracy of future demand forecasts.
Benefits: Faster Innovation Through Configurability and Flexibility
The shift to exception-based planning has saved The Vitamin Shoppe hours of planning time that can instead be put toward more value-added tasks, while RELEX’s “configure, don’t code” approach has further opened up the team’s ability to innovate. By defining and updating their own configurations through RELEX’s easy-to-use UI, The Vitamin Shoppe’s planners have been able to continuously develop new ideas and put them quickly into production. Furthermore, The Vitamin Shoppe’s planners can simulate the planned changes within the system to preview their impact on inventory and other KPIs, enabling them to detect any unintended consequences ahead of time and make changes with confidence.
“The idea of not being reliant on coding or changing complex algorithms was a dream for me. I am surprised every day by how empowering this is for me and my team,” said Finkelstein.
The flexibility of the RELEX team itself was another significant factor in the success of the partnership. When an unexpected turnover in staff occurred, RELEX was able to provide The Vitamin Shoppe with a dedicated resource to help train both the existing team and new hires. RELEX also took the time to ensure that they delivered a solution that was configured to fit the current needs of The Vitamin Shoppe and that could easily be adapted to meet future requirements.
“What impressed me most about the solution was how it evolved over time. … Rather than giving up or using the classic consulting line of ‘that was not in scope,’ they continued to dig deeper into our process,” said Finkelstein. “I’m confident that implementing RELEX has already and will continue to improve our omnichannel product availability.”