As an established retailer, you require a wide range of styles in multiple sizes to meet the customer demand. The need for instant gratification has become a dominant force in retail, hence the primary requirement of having the right stock available in the right place at the right time.
Constraints on store space, minimum display requirements, and demand forecast based on limited data availability, initially determined how the inventory will be allocated across a chain of stores. All these constraints led to overstocking and understocking across stores a few weeks after the season launch.
In situations where excess stock is present in stores with low demand, or when the fresh inventory is leaner in terms of width and depth in stores with higher demand, inter-store transfers help in improving stock availability. It is a process of re-distributing the existing inventory and making corrections to the allocations done during the pre-planning period.
Since every decision involves the resources of cost and time, retailers need to analyze the requirements and benefits before making these shifts. Inventory optimization through inter-store transfer has several benefits:
- Improve inventory health – Boost sales of slow-moving articles by reallocating them to top-performing stores.
- Increase inventory turns – Increase sales of available stock by redistributing its basis true in-season regional demand.
- Improve stock cover and reduce stock-outs at the SKU level – Minimize loss of sales by identifying the true Rate of Sale (ROS) for every SKU at the store level. Ensure there is neither over-stocking nor understocking anywhere that directly impacts the top line and margins.
- Increase full price sell-thru – Push stock from the stores with lower footfalls to those with higher footfalls and higher bill value. This directly increases the chances of selling at full price, thus impacting the top line and margins.
- Reduce brokenness: Minimize broken stock (styles with only fringe sizes available) by consolidating broken stock from all the stores and transferring full-size sets to the ones where the likelihood of selling is maximum as per the latest trends.
- Improve Omni-Channel distribution: Identify the right stock to be pulled out of Offline stores and transfer them to the Click and Collect stores or other stores that can be used as hubs for online fulfillment.
Increff Merchandising solution helps optimize stock at the granular level. By calculating the ideal requirement for every Store + SKU, it utilizes excess inventory to improve stock health and has consistently helped bands achieve 20-30% improvement in stock health and ~30% improvement in sales.
One of India’s leading formal wear brands implemented the solution across 150+ brand outlets and witnessed a 40% increase in sales at the receiving store. Inter-store transfer reduced brokenness by ~40% and prevented sales loss. One of the well-known International brands, expanding operations in India, reduced brokenness by 34% and uplifted sales by ~80% for the transferred stock. The overall store sales increased by 66%.
Overstocking and understocking are some of the major challenges in retail. It not only limits proper exposure of inventory but also hugely impacts topline revenue and bottom-line margins. Increff Merchandising solution helps you make quick decisions on stock adjustments basis true demand patterns so the optimum potential of your brand can be realized, any time of the year.
31 March, 2021
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