Now that spring has finally arrived, retailers are spring cleaning their warehouses to make room for the latest products and trends. In a hyper-competitive retail environment, offloading inventory requires a calculated approach to maximize profits and space.
Here are a few ways you can quickly move outdated inventory:
Targeted Email Campaigns and Special Promotions
Use POS and shopper data to target existing customers who have purchased similar products and sizes when creating special deals around remaining inventory.
For example, shoe stores or departments with size 8 merchandise can send an email campaign to notify shoppers who previously purchased size 8 shoes. This is an effective way to personalize communications and build shopper loyalty, while selling excess inventory.
Online Clearances and Pop-up Promotions
Along the same lines, cross-sell to online shoppers when they add to cart or view product information by alerting them of similar items on clearance. Offering suggestions based on the items shoppers are already searching for and viewing will help unload your clearance merchandise.
Choose the Right Liquidator for Your Brand
If you’ve exhausted clearance and sale opportunities and still have excess inventory to move from your warehouse, you should consider liquidating your stock. It’s important to choose a liquidator that is consistent with your brand and values. Since those stores will be sales channels that represent your company, you need to pick liquidation partners that are appropriate for your customers, style and brand.
A strong inventory management foundation makes it easier to move and optimize inventory throughout the year. Excess and slow moving inventory can cause headaches for retailers. It ties up your working capital and you miss out on the opportunity to use that cash for new inventory. You also underutilize valuable warehouse space that could be used for faster-moving goods, which equates to a holding cost.
Creating a Better Inventory Strategy
Retailers and their fulfillment providers must work together to optimize inventory and warehouse efficiency. The first steps are gaining visibility into your inventory levels and understanding which products are slow movers.
Your fulfillment partner should educate you with comprehensive reports and analysis on key inventory metrics, and inform you about ways to improve your strategy. Some strategies include:
Velocity Reporting: Velocity reporting aligns inventory with customer demand, ensuring that inventory mix is always in line with actual demand. Velocity reporting highlights slow-moving inventory to enable retailers to avoid discount wholesaling and liquidation.
With this data, retailers can see how well each SKU does in any given timeframe. If you discover 100 SKUs with no sales, it’s a good reason to cut your losses and get rid of those receipts. By identifying slow-moving inventory, velocity analytics can also play a role in reducing holding costs, improving the retailer’s bottom line by minimizing the storage costs of sluggish SKUs.
Cycle Counting: When creating a better inventory strategy, a great first step is to make sure your inventory is as accurate as possible. Introducing cycle counting based on ABC logic is a much more accurate way to manage inventory based on a pre-defined count calendar. For example, you can count your A inventory (fastest moving items) monthly, B inventory quarterly and C inventory (the slowest moving inventory) once or twice a year.
The secret to successful inventory management is to use all of the data and insights available to plan and forecast accurately. Retailers who work with their fulfillment providers to develop a strong foundation for effective inventory management will be in a good position to move inventory quickly throughout the year, while continuing to cater to customer needs.
Maria Haggerty is the CEO of Dotcom Distribution.