According to a recent survey by Inventory Planner, 44 per cent of fashion retailers have surplus goods they’re desperate to offload – accounting for almost 20 percent of their entire stock holding.
Cycling apparel brand Cycology is one of those merchants. The successful global business tried to ‘make do’ with a manual approach to managing its extensive inventory – and ended up paying the price.
“I knew it was crucial that we had the right stock in place at the right time so I would spend hours poring over data from multiple sources and trying to massage it into spreadsheets to come up with a solution that worked,” explains Cycology’s Founder and CEO, Michael Tomchin.
“The trouble was, we’ve got about 2,000 SKUs in every warehouse for every product, so trying to work out the specifics of what we needed was absolutely daunting. It resulted in huge overheads, inventory overhang and multiple bad decisions.”
Australian-born brand Cycology, a primarily DTC multichannel business, operates in four separate regions including Europe, the UK, North America and Australia.
The danger of sitting on inventory too long is clear. Target saw its shares tumble after it slashed prices to clear out unsold inventory in early June. Last quarter, Walmart’s inventory was up 33%.
British brands MADE.com and countrywear brand Joules also recently entered administration after getting caught with massive inventory at just the wrong time.
Michael says: “If you’ve got a heap of small sized products but you’re out of stock of large, which is the one everyone goes for, you’ll lose out on sales and have capital tied up in inventory that’s not moving. It’s of absolutely no value to have heaps of the wrong sizes and it’s a massive risk to cash.”
Fashion merchants that ‘go it alone’ struggle to keep on top of their inventory’s performance and stay up-to-speed with rapidly changing trends. Sadly, this results in missed sales opportunities, customers disappointed by lack of stock or cash tied up in so-called ‘safety stock’ which eventually has to be liquidated.
“The harsh reality is that if you don’t take care of inventory your business will be dead,” Michael says.
“Inventory planning needs to be a spending and strategic priority.
“As merchants we happily spend a fortune on advertising, websites and design but might not spend anything on inventory planning. That’s crazy! Inventory planning needs more focus because it can be the difference between surviving – and not.”
Cycology credits Inventory Planner for resolving its inventory issues. Michael says: “We initially looked at a bespoke inventory planning tool that was 10 times the price of Inventory Planner and didn’t do all the things we needed. I quickly realized that Inventory Planner is a truly tremendous tool – and a very cost effective one.
“It’s so much more than just an inventory planning tool. It’s an intelligence tool and an information management tool that I use every single day. It’s transformed how we operate.”
Inventory Planner is the #1 inventory planning app which reveals which inventory to order, how much to order, and the perfect moment to order it, based on an accurate calculation of how much you will sell.
Michael says: “I tell other merchants that they can’t afford not to have Inventory Planner.
“Inventory Planner gives me the actual history of what I’ve consumed, where I am today and where I can get to after I’ve ordered stock. It shows us patterns and trends across our regions and warehouses. It helps me see which products might be slow moving so I can adjust my sales strategy accordingly.
“Say you hold $1 million in inventory and, at a very conservative estimate, Inventory Planner improves your inventory ordering and investments by 10% a year (for us, it’s actually higher than 10%). That would result in a saving of $100,000 a year.”
Michael is firm in his belief that fashion stores need to take their inventory strategy up a gear if they hope to be successful in 2023, introducing technology to replace more manual workarounds like spreadsheets.
“There are three things that can go wrong with inventory – you can have too much, too little or the wrong variants.
“I just don’t see how any retailer can manage those risks without a good system in place. Maybe if business is plain-sailing you might get away with it, but in the current market when demand is unpredictable and costs are sky high, you just can’t.
Want to see the impact Inventory Planner can have in your business? Start your free 14-day trial today.