Gold

Retailers are constantly faced with a major issue – consumer choice.  Being able to tailor ones products to capture consumer’s choice is vital in both marketing and manufacturing.  If you do not know what the consumers want, how will you be able to run an effective company?

When looking at Dell, it is clear that being able to meet consumer choice is positively correlated with inventory turnover and revenue.  In the year of 1993 Dell reported a loss, and in the following year withdrew from retail.  However in 1996 with the creation of Dell.com, Dell saw massive increases in inventory turnover and decreases in week inventory.  Since Dell was able to offer more to the consumer from the website, allowing them to successfully tailor each order to the customers requests and to earn more revenue simultaneously increasing inventory turnover.  With increasing competition from such companies as Apple and shifts in consumer demand, Dell decided to re-enter the retail market by selling its products through Walmart and other retailers worldwide in 2007.  Being pushed back into the retail market, Dell is forced to get it right the first time when manufacturing its products.  Consequently by not being able to offer every option at the retail level, Dell has shown almost a %50 decrease in inventory turnover.  With the limits on consumer choice offered at the retail level and more appealing products from its competitors, Dell has to become innovative and meet consumers constant changes in taste.  From this it is clear that consumers choice highly affects inventory turnover and most importantly revenue two crucial numbers in determining effectiveness.