A Proper Handle on Returns

Delray Beach, FL-based women’s apparel cataloger Boston Proper two years ago developed a software system to help with its biggest inventory management issue: returns.

The software, which creates a spreadsheet that each buyer has access to on his computer, performs predictive modeling on return rates along with merchandise demand rates to calculate how much inventory is needed.

Before the software, says Margo Wyckoff, vice president, merchandise planning and inventory control, buyers had to manually figure out by SKU what to buy, add in demand for future catalogs, and calculate returns. “There’s a period where you know you bought right, but you’re waiting for returns to come back to fulfill demand,” she says. “You want to fill all your orders, but you also want to recycle live demand, yet you can’t control when the customer wants to send merchandise back.”

Boston Proper also revised its protocol for making initial buys, says Wyckoff. Instead of buying 80%-85% of net needs, the company now buys in two stages. Immediately after the product has been selected, Boston Proper buys about 90% of the projected merchandise it needs; it decides how much more to buy once it sees the film of the catalog photo shoot. The catalog creative provides an idea of which items are going to be the stars, Wyckoff says: “You revisit the plan again once you know which photos are popping, so you can get behind your covers and opening spreads.”

Also key to being able to buy more goods up front is making sure you have a smooth liquidation process on the back end. Boston Proper began mailing a clearance catalog two years ago; it also uses package inserts and catalog blow-ins to promote end-of-season products.

The company’s inventory woes once earned it the nickname “Boston Backorder,” Wyckoff says. But now, thanks to the new software, refined buying strategy, and enhanced liquidation process, its initial fill rate has increased from 30%-40% in 2002 to the current level of 60%-70%.