3 Ways to Intelligently Manage Retail Products and Trim Inventory Bloat
Inventory bloat is a huge challenge for retailers. Many consumers are enjoying an early holiday-season shopping surprise as retailers begin slashing prices on late-arrival inventory. Once idle on shipping containers, clothing, electronics, and home-improvement products are flooding stores and warehouses, forcing retailers to cut prices to reduce stock. Retail giants Walmart and Target alerted investors over the summer that price cutting would be needed to regain control over excess inventory.
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This latest inventory bloat is the result of companies trying to respond to pandemic demands in the face of supply chain bottlenecks by overstocking. However, now consumers are shifting spending away from items popular during the pandemic, like appliances, furniture, and casual clothing, to merchandise like luggage, cosmetics and fashion.
Shifting spending habits and excess inventory from supply ships once stuck at bay is taking a toll on retailers nationwide.
Predicting consumer demands and available inventory during an uncertain economy challenges retailers to know where to allocate stock as shoppers change what they’re buying and where, especially as they switch between shopping online and brick-and-mortar stores. Here are three ways retailers can use data intelligence to keep up with changing customer demands and avoid excessive inventories.
Establish a Single, Real-Time View of Inventory
Many retailers are tackling this problem by taking a single view of their existing inventory wherever it might sit with a real-time snapshot. Having that picture of all products, whether in multiple warehouses, retail stores, in transit, or with a drop ship vendor is helping them manage their stock more effectively. They’re freeing up much-needed capital as they improve space management in stores and warehouses. Having a single, accurate view of their inventory and stock in stores, distribution centers, and warehouses lets them know how much stock they have and where it is sitting at any moment.
Apply Distributed Order Management
Retailers need to know if their products are available constantly and in the right place at the right time. This insight is necessary to satisfy different consumption channels and delivery models, including store pickups and online orders for home delivery.
For example, if a coastal town is expected to be hit by damaging storms, retailers like Home Depot or Lowe’s will want to ensure they have adequate stock of generators, plywood, nails, and other products in stores that serve that area.
A Distributed Order Management System lets them see what is available across all locations and then allocate and send those products to where they’re most needed. This approach provides visibility to know what is being processed and ready for pickup or shipment to the local distribution centers. They can know how quickly products are being purchased and flag damaged items to avoid them from appearing on online channels.
Implement Dropshipping
Dropshipping is a strategy that saves money and space without losing sales. It’s a method of order fulfillment that does not require a business to keep products in stock. Instead, the store sells the product and passes the order to a third-party supplier, who then ships the order to the customer.
Dropshipping enables retailers to cut costs by stocking up on only the inventory they know will sell. Dropshipping can ensure that a product is shipped quickly to the right region if there is an unexpected surge in demand for a particular product.
If something happens to a retailer’s warehouse, they can still fulfill orders by dropshipping the products from elsewhere. This approach safeguards against unexpected changes in demands and pricing.
With these three approaches, retailers don’t have to increase supplies to keep up with customer demand. Instead, they can rely on data intelligence about their existing stock to ensure it’s available where and when needed and priced to meet demands while limiting damage to their bottom line.
Improved visibility, order management, and dropshipping are helping retailers respond faster and more intelligently to customer demands, which helps avoid massive discounting and unloading inventory onto third parties.
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