Retail sales improving, what does that mean for inventory?
Although many merchants have struggled to liquidate excess stock, consistent sales improvements are mitigating the issue.
When merchants took to their retail inventory management solutions before last year's holiday season, they realized they may have ordered more materials than they needed. The post-recessionary economy has given birth to a breed of shoppers that exercise caution, especially during times when spending is at its highest.
"Out of stock" becoming regular?
However, this may not be the case when December arrives. Forbes noted a report conducted by Credit Suisse, which monitored apparel inventory levels from September 2013 to August of this year. The study discovered stock growth is expected to be tempered due to more frequent shopper activity.
"As a result, we believe that a nine-month period of excessive markdown activity and margin degradation for [the retail industry] is coming to an end," maintained Credit Suisse, as quoted by the source.
Credit Suisse discovered apparel merchandising is expected to improve across the board. Even Walmart, a company that has struggled to sell clothing and footwear for quite some time, is in the best position to advance in this area. Specialty brands such as shoe sellers and athletic apparel distributors are predicted to encounter a favorable environment. Merchants catering to the needs of teens are already seeing sales increases
What are the challenges?
It's possible some retailers may acknowledge the intelligence presented by Credit Suisse and disregard it as a particularly optimistic take on the situation. While this may true, it's important for merchants to leverage data analysis programs and correlate them with Credit Suisse's conclusions. This will prevent them from ordering too much or too little inventory once the holiday season unravels.
Setting a good example
Automation and centralization are also key for apparel merchants to oversee stock liquidation and avoid shortages. Retail Info Systems News reported Talbots replaced its legacy inventory management and customer intelligence systems with a revamped software solution that tracks every item that flows through the distribution channel.
The system allows Talbots to process every transaction, whether online or in-store, in real time, which in turn produces a holistic view for decision-makers to capitalize on. For example, if the merchandiser discovers a store in Atlantic City, New Jersey is selling more long-sleeved shirts than an outlet in Newark, Talbots' logistics chain can redirect more of these items to the Atlantic City store.
It's this kind of flexibility merchants need, especially during these volatile economic times.
