Once upon a time, retailers placed merchandise orders several times a year in advance of a few major selling seasons.
Today, big chain stores – particularly those in the fashion apparel industry – have adopted lean retailing practices, in which they replenish and refresh inventory continually across as many as 52 “micro-seasons.” Clothing brands like Forever 21, Zara and H&M have been leaders in this trend. To compete, your store’s inventory must turnover rapidly. The idea is to encourage customers to visit your store more frequently under the assumption that specific items may be “here today and gone tomorrow.” Consumers are more demanding and the Internet has made them more style and price savvy. They expect the right products at the right time in the color and size they want. Your challenge is to meet their demands while keeping your inventory up to date with the latest trends and brand refreshes, all while avoiding getting stuck holding inventory that has already outlived its shortened life cycle.
Mitigation Measures
- Track your inventory. Keeping track of your store stock can be one of the most time-consuming tasks you face as a retail store owner. A good inventory tracking system can help you keep hot selling items in stock to better meet customer demands, control theft, manage your revenue stream and weed out slow moving items through markdowns and sales. Compare top retail management software systems to find the package that aligns with your needs.
- Stock up just-in-time. Lean retailing demands a just-in-time inventory system. These systems can help you plan purchases more intelligently and quickly recognize the fast moving items you need to reorder and the slow moving items you should markdown. Just in time also limits the chance that your store will be stuck with too much out-of-date inventory.
- Buy smart. Develop and maintain close relationships with your suppliers and with experienced, savvy buyers.
- Track inventory at point-of-sale. Use point-of-sale (POS) software to record each sale and keep inventory records up-to-date. You can run reports that will help you make better inventory management decisions.
