THE PENDING INVENTORY APOCOLYPSE

It was refreshing to see such positive sales up to and including Black Friday/Cyber Monday. What people are fearing, and it seems to be manifesting a bit, is that the next few weeks will be softer and will leave a glut of unsold merchandise trapped in stores. In the 20th edition of HOW PREDICTABLE , we look at some clever means to manage the upcoming pinch and how to implement them quickly in the first quarter to maximize turns.

WE ARE NOT NOT BUYING

It has taken a few years and many lean January sales outcomes to know that not replenishing your best items at the slowest time of year, when they make up such a huge percent of your unit sales, is fatal. Today we are told to get your inventories in line and to not stop buying what is needed to do your sales. This leaves you with few options at your disposal that will help you, but not entirely empty-handed. You may want to consider one of the following methods to combat the high INVENTORY but maintain your sales and in stock positions.

1.?????? Assortment replanning: There may be an opportunity to delist some products in some areas and have them appear as a new listing in another location. For example, your items in Atlantic area may not have performed and would do much better in a more central region of the country. If you have full assortments and size runs, or even mostly full you can fill in, then there may be an opportunity to offer “newness” with old product in some locations. Finding traits of stores that do well may help you isolate stores where this may be an opening.

2.?????? ?Regional Stock Balance/Clearance: This is often done during a slower selling season to take advantage of staff availability to execute. Find your stores within your region that have an opportunity to sell at a reduced price and limit your geographic circle to contain the costs. Create a PLUSES and MINUSES sheet by store for some of your key overstocks and hit them with a small regional markdown. As the region starts to react to the lower price, use stock rebalancing once to give stores in access a place to move product to.

3.?????? Your Overstock as Your Supplier: This once may require a bit of extra Python or R work, but easy enough to build. In your replenishment system, check to see if you have sourcing flexibility. If so, discover how to set it to use STORES as your source. If you do not have this (most won’t), do not fear, you can hack it.

·???????? Turn off sourcing for the item or DO NOT APPROVE any auto-allocations.

·???????? Determine what stores will need this product for regular replenishment.

·???????? Send a pick transfer to the overstocked store to have them disperse your weekly needs without BUYING new product.

·???????? Turn off as soon as INV has reached acceptable Weeks Of Supply levels.

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Innovation for the Customer’s Benefit

What you have done is proposed some financially competitive or cost neutral solutions to inventory imbalances and seeks to fix them quickly in your financial year. The benefits of having made all your inventory turns goals on the backs of less purchases and more sales will carry throughout your full year.

Start thinking about these today and post-Boxing Week will be a great chance to jump on these savings early.