Optimization of sales in fashion retail by warehouse integration in multichannels

Abstract: Issue of study: The thesis studies the optimization of sales in fashion retail by integrating multichannels. The multichannel integration relates to reallocation of articles between brick and mortar store warehouses and online warehouses. Purpose: The purpose of the thesis is to investigate how increased multichannel integration, in terms of reallocating articles between online store warehouses and brick and mortar store warehouses, affect sales for retailers within the fashion industry. The thesis investigates the potential in increasing the sales by increasing the availability online and by decreasing the share of reductions in price, by reallocating articles to the most suitable channel. Method: The research was conducted as an embedded single case study with one subunit studying the effects of increasing availability online and the other subunit studying the effects of decreasing price reductions. Data was gathered from four main sources: archival records, documentation, interviews, and observations. The analysis was performed by estimating sales figures if the reallocations had not been performed and compare it to the sales figures after the reallocations. Conclusions: By reallocating articles to the online warehouse, the sales on the reallocated articles increased on average by 67 percent, and had the potential of contributing to an overall increase of 1.2 percent. The sales potential can be further increased by a larger share of the additional store stock a larger share of comparable articles between the channels. The reallocation with the purpose of reducing price reductions contributed to a decrease of 19 percent of the reallocated articles, and an overall decrease in the total price reductions in the online store by 0.4 percent. Reallocating articles between channels with the purpose of reducing price reductions is considered to be less risky in terms of the likelihood of sending the wrong article, than the reallocation purpose of increasing sales, which can be explained by the impact of the short life cycles of the articles in fashion retail and thus the impact of timing.