What a difference a year makes. Retailers throughout the country have too much inventory on their hands. Yet this time last year, supply chain disruptions caused retailers to believe they would have empty shelves leading up to the holidays.
With high inflation slowing spending, retail giants like Target and Macy's have too much merchandise on their shelves. But another way of saying “too much inventory” is “wrong inventory”.
As food prices rise, consumers are looking for ways to save money. They're waiting to buy non-essentials; buying generic brands instead of name brands; and finding new ways—like recommerce—to spend less money.
Could retailers have been more prescient about the foreboding macroeconomic trends which have caused the current inventory glut? Given the fact that retail is a business which must remain one step ahead of its consumers to be successful, yes, they should have been better prepared.
The good news is that it’s never too late to get ahead of future inventory issues, whether from supply chain disruptions, betting on the wrong trend, or a contraction in spending. Predictive analytics and advanced technology can be the crystal ball retailers and brands need to support decision making.
Here are seven ways to get ahead of inventory mismanagement:
- Optimize assortments first: Leverage consumer insights with predictive analytics to discover the best combination of products.
- Sell more product: Identify the right pricing strategies to increase average order values or the best marketing message to reach the target audience.
- Make it personal: Create specific assortments for various customer segments. Brands and retailers usually have three primary types of consumers. Understanding who those consumers are allows brands and retailers to target these segments more easily.
- Go directly to the source: Solicit customer feedback on product assortment before production. Using 3D samples, it’s no longer necessary to create multiple physical samples which are not only expensive, but bad for the environment. Incorporate consumer feedback at every step of the development process.
- Don't leave money on the table: Identify optimal opening price points and pricing cadences to maximize sales across the product lifecycle by using price optimization software and modern techniques for predictive pricing strategies.
- Keep it simple: Don’t add complexity to products which ultimately just drive up the price but not the value. More cumbersome and time-consuming manufacturing processes will not always yield higher profits.
- Handle the truth: Know how you stack up against the competition with honest competitive analyses. Discover how to stand apart with more relevant pricing, packaging, and product attributes.
As retailing becomes more complex, the organizations that will remain competitive will integrate data-driven decisions into every aspect of their business, from product ideation to manufacturing to marketing. The road to recovery for betting on the wrong inventory is long and far more expensive than getting it right the first time with predictive analytics tools.
First Insight’s InsightSelection leverages real-time data analytics and customer feedback to help retailers and brands optimize product assortments and identify winning products and design elements before costly investment decisions are made. By applying First Insight’s industry-leading retail assortment optimization software, retailers can achieve better inventory assessments, widen profit margins, and boost overall sales.