How to start managing inventory for peak season now.
Come October, you’ll be too late.
“Retail holidays are days of the year when shopping activity peaks, both in brick-and-mortar stores and online.”Shopify, Retail Holiday Calendar, What you need to know.
October to January is retail’s peak season. A mix of the holiday season and end-of-year spending, along with dedicated sales, holiday promotions and peak travel period all coincide to create a perfect storm of consumer spending and demand. According to Shopify and data from the National Retail Federation (NRF), “Holiday sales grew 14.1% in 2021, and consumers spent a record-breaking $886.7 billion during the US holiday season of November and December alone.”
The sentiment is echoed across the Atlantic too. A report by Channel Advisor, which surveyed 134 brands and retailers in the UK together with Retail Gazette, reported that “44% of retail businesses said a quarter of their yearly sales are taken over the peak period and 40% said it’s more than half.” with eCommerce as a spending outlet growing YOY.
Apparel retailers and brands are already facing inventory challenges caused by the triage of supply chain uncertainties, a lack of clear data to make informed inventory buys and changes in consumer spending as countries try to return to a post-pandemic new normal, while brands frantically try to clear pandemic-era stockpiles that are no longer attractive to consumers.
Uncertainties in the stock market also impact consumer spending and impact company profits. A report by The New York Times made it clear that “It’s far too soon to know if skyrocketing consumer prices have peaked, if the Federal Reserve has charted the right path for interest rates, or how well the economy will be able to hold up in the face of fast inflation and rising borrowing costs.” Brands like Walmart and Target, which are overstocked on pandemic era supplies and are now aggressively pushing sales to clear excess inventory ahead of peak season to make way for new stock. In what sounds like ominous news for businesses as a whole, the article goes on to add, “A survey from the National Association for Business Economics showed that forecasters expect gross domestic product to grow 1.8 percent in the fourth quarter from a year earlier, down from their prediction in February of 2.9 percent.”
Despite this bleak news, smaller retailers and SMEs have the flexibility and nimbleness to alleviate the the pain of peak season inventory management by putting in place some key measures now.
Take action, NOW.
“What’s absolutely clear is this is the year of inventory management. That means using data and technology to pull the levers of inventory control with precision. That’s not a skill that can be built overnight. And in the next few quarters we’re going to find out who’s invested in it and who hasn’t.”Emma Cosgrove, Senior Reporter covering Logistics at Business Insider
Brands need to start now to address this and put in place measures to manage peak season inventory effectively. Target’s squeezed profits due to aggressive sales to offload excess inventory is not an outlier. The industry as a whole is facing the same inventory calibration (or lack of) woes. Just look at recent headlines
- US retailers are facing a Goldilocks problem with inventory – Quartz
- Why are retailers struggling so hard to balance inventory? – RetailWire
- Markdown Mania—TVs, Furniture, Leisure Wear And More—Hits Major Retailers Moving Excess Inventory On Pandemic-Era Goods – Forbes
Short term solutions:
Having a robust variety of rich media on your brand’s product display pages (PDPs) along with imagery, video, information and smart recommendations will help promote high stock items to shoppers, encouraging them to purchase while reducing the likelihood of returns by managing consumer expectations successfully. Luxury outerwear label Canada Goose uses video to show shoppers how their down jackets look when worn and on the move, while SuitShop provides detailed apparel fit information and choices for their tailor clothing to help customers make the right decisions based on personal preference. Enriching your PDPs now is a fast way to increase conversion on items that are overstocked while managing customer expectations around the actual product to reduce the likelihood of returns.
2. Fix fit
Driving transactions now is key to getting rid of unwanted stock without having to resort to aggressive promotions and deep discounting en masse, moves that undermine brand value and hit profits. With 70% of returns caused by poor fit and 48% of U.S. consumers bracketing their online purchases due to fit, AI size recommendations for apparel, like Bold Metrics Smart Size Chart, help brands reduce average return rates by 32% after a year of implementation while boosting conversion 20% on average. By connecting customers to their ideal fit while also taking into account fit preference to address individual customer needs and likes and it comes to fit and sizing, empowering shoppers with an easy and accurate way to determine their ideal size while shopping online.
3. Marketing, marketing, marketing!
Invest in strategic marketing campaigns around the excess inventory. Take some time to plan out customer conversion marketing strategies based on what products you have too much of. Get creative and empower your marketing team to find interesting and unique ways to engage with your shoppers without having to resort to price-slashing. For example, leveraging a clever campaign around Fashion Day (July 9th!), or creating loyalty programs or give-aways to entice customers to buy more can be a more effective way of driving transactions on high-stock items while simultaneously amplifying the brand value in a positive way.
While the above solutions are a panacea for the short term, brands need to put into place long term strategies to improve inventory resiliency. Here are 3 long-time solutions that can be implemented ahead of peak ‘23.
1. Get (data) smart.
Brands get an influx of customer data on a daily basis. Leveraging that data effectively to future-proof is the key to optimizing inventory. Brands need to invest in data analytics to help them better understand their customer wants (product), needs (fit and sizing, style etc) and their purchase decision-making process. Starting that process now with provide companies with the right tools to serve their customers
3. Reduce returns, and keep them down.
Returns are a pain. They equate to frustrated customers, loss in revenue, extra work to process them and a negative environmental impact when they end up in landfill or as a result of the increased carbon emissions from transporting them back and forth. Apparel brands can reduce returns by putting in place a sizing solution or virtual fit solution that works and is easy to on-ramp for both customers and tech teams. When we introduced our next gen Smart Size Chart, it included a Smart Inventory™ feature to help brands leverage real-time data to generate actionable insights to better manage inventory. The accurate smart size recommendations were already helping brands reduce average return rates by a third. The additional feature just made it easier for companies to encourage sales in spite of less inventory.
3. Make clothes that customers actually want.
Brands don’t have a crystal ball but here’s where technology can be of help. Quick surveys and feedback forms can be a great way to learn more about your customers and their needs. Instead of making clothing based on fit models and inaccurate grading, which can lead to even more surplus stock, brands can utilize actual customer fit preference and body data to design products accordingly. In the mid-term, this means better-fitting products, in-depth designer insights that enable data-led design decisions and clothing that fits according to real customer wants. In the long term, this equates to brand loyalty, (just think about how you’ll buy a pair of jeans that fits you perfectly… again and again and again), increased conversion and less waste as brands have better insights on how many units of product their customers might purchase on a style-by-style basis.
- PS: No biggie but check out our Apparel Insights solution if enabling data-led design and optimizing operations across your apparel brand interests you.
While inventory management is a crucial issue for retailers, brands need to start now (Christmas in June, anyone?) to minimize the negative impact of excess inventory on their bottom line come peak season ‘22. They can do so by driving transactions and sales using rich media and supplying in-depth product information, reviews and visuals. Apparel retails and brands should leverage AI-powered tools to help encourage conversion and reduce fit-related bracketing purchases and returns in time for peak ‘23.
Interested to learn more? Discover how your brand can manage supply chain shortages and post-holiday returns here.