Are you on top of your Inventory Management? Top tips from a retail expert

Last week, we caught up with our very own Charlotte Mackenzie, a merchandise planning expert here at Style Arcade. With over 12 years experience in merchandise planning at brands like The Iconic, Topshop and Stylerunner (just to name a few), Charlotte is highly skilled in data analysis and business insights with tremendous success in driving retail merchandise strategies.

Check out what she has to say about inventory management, utilising data, and her favourite markdown strategies for retail and beyond.

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Style Arcade [SA]: Let’s get straight to it: It’s no secret retail inventory management is super complex. As brands look to new channels and emerging markets to drive growth, what implications does this have on managing inventory streams?

On one hand, you have traditional bricks and mortar brands adding channels like eCommerce to their business. And on the other hand you have pure-play online brands expanding into marketplace streams.  In both instances, it can be tricky to manage your stock. Who gets what product? And how much should they be allocated? What can you advise brands and retailers on how best to manage their inventory as they add additional sales channels?

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Charlotte Mackenzie [CM]: Inventory management can get messy real quick. My first tip to retailers is always to make sure they allocate their stock to individual channels to track performance accurately. If you stock pool from one location, attribution gets too complex and can become messy.

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SA: How do you avoid messy stock?

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CM: Try to buy for individual channels separately in regards to:

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1. sizing,

2. categories, and

3. pricing

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Not all channels sell the same products across the same categories and prices so you shouldn’t buy for them altogether.

If possible, try to only allocate out 50-70% of your stock in the first instance and then once you see a reaction, you can allocate the remaining stock to your best performing channel.

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SA: Pre-pandemic, retailers were assigning 30% of their stock to eCommerce, however with the shift in buying behaviour during the lockdowns and now attempting to find the new norm, how do you advise retailers on managing inventory efficiently?

CM: USE! DATA! I cannot emphasise enough how vital utilising data is to understanding and managing your inventory most efficiently. By using data you can track performance by channel, and use that performance data to influence future purchasing. For example, you might discover products that have a much higher rate of sale on eCommerce than brick and mortar or vice versa.

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SA: What are some of the best ways to utilise data?

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CM: There are so many ways using data can provide valuable insights to retail business. From customer behaviour, down to specific product performance including, what colours, prices and categories resonate best with your customers. The use of data is so important in the decision making process particularly when it comes to purchasing inventory.

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CM: One of my top tips is to monitor percentage of new and aged stock since this directly impacts conversion. Generally speaking, the rule of thumb is the newer the product, the higher the conversion. Using data to monitor this makes sure you’ll keep your conversion high.

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SA: Wow it sounds like data really is the key to retail success. Can you outline top tips for inventory management during peak seasons or unexpected spikes?

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CM: Trade your business. You should always be ready to react and replenish products that are selling out quickly. If you can’t get exact repeats, buy similar products or categories to optimise the opportunity. It’s important to always have your finger on the pulse so you don’t miss a beat.

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SA: You covered best sellers, but what about older inventory that isn’t performing as well?

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CM: If you have old inventory you’re looking to clear, capitalise on those high traffic periods and discount your old stock to clear it and open up cash to buy more new product or replenish best sellers.

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SA: What do you think are some of the most common challenges retailers face when it comes to managing their inventory?

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CM: Keeping inventory fresh is probably the single biggest challenge for retailers. Inventory ages quickly so it’s important that retailers monitor the age of their inventory really closely. As we discussed earlier, having too much old inventory directly impacts conversion.

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SA: How do you suggest navigating and solving those challenges?

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CM: I advise adopting a Clear As You Go (CAYG) strategy: I suggest reviewing slow performing products every 2 weeks and applying a discount of  20-30% to get them moving. Monitor these SKU’s and increase this discount by 10-20% each week until the products sell out. This strategy will release cash flow for new products and increase profit because you’re not waiting until your inventory is too old and no longer relevant to start discounting.

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Main Image Credit: Tyler Joe