Many things improve with age. Balsamic vinegar, cheddar cheese, cast iron skillets, and of course, fine wine. Inventory, unfortunately, doesn’t age well. The longer you hold inventory the less profitable it becomes. When your inventory is the largest asset on the balance sheet, and consumer demand is severely disrupted, there’s a problem brewing. You’ll need new strategies for the new normal. Let’s take a look at some examples.
1. Expand your inventory life with smart product bundles
How do you make a collection last longer? You can bundle items (e.g. summer t-shirt with spring/fall hoodie or cardigans) and market them as a set. Or you can mix and match new combinations to target remote workers on video calls – like comfortable loungewear on the bottom, combined with a cardigan or a jacket?
Also, you can bundle items around a theme or experience that can be enjoyed at home, like a cookbook and serving utensils for ‘Pasta Night’ or camping chairs with candles and blankets for a makeshift ‘Campfire Night’. Or consider bundles of beauty products for ‘Home Spa Days’. If you sell ‘essential’ products, you should start thinking about new ways to segment your inventory.
2. What is Essential vs Non-Essential?
We didn’t used to think about inventory in terms of ‘essential’ and ‘non-essential’, but after a pandemic, it’s probably a good idea to consider if it makes sense to segment products this way in the future. Think about new product attributes, categories, or a combination of both.
Your approach to segmentation will depend on how you use the data. For example, you might use it to prioritize certain categories and SKUs over others in your fulfillment process. Or drive online merchandising with the data. Even as markets open up, change will be gradual, so there will continue to be more demand for ‘essentials’. What is classified as essential today will probably change over time, so you’ll want to stay on top of the latest trends.
3. Track those Consumer Trends
Consumer demand has shifted over time. Walmart CEO, Doug McMillon, noted that while initially everyone was stocking up on food and other consumables like toilet paper, it then shifted to entertainment and puzzles, then personal grooming. You should expect those trends to continue to evolve.
Of course your own sales data is a great place to start, but here are two other sources worth looking at:
McKinsey & Company has established a global Consumer Sentiment Survey, updated weekly, that provides insights into consumer confidence and trends.
Glimpse, a platform that analyzes hundreds of millions of consumer behavior signals from across the Internet to identify topics with rapidly growing or declining popularity, has released a COVID-19 Consumer Impact Tracker.
As trends are constantly changing, many retailers are looking to take cues from fast fashion.
4. Experiment with more agile buys
Because trends are constantly changing, some retailers are taking cues from fast fashion.
The thing that fast fashion does best is adapt. Trends evolve quickly. This is why fast fashion retailers buy small lots often. And because they change many of their vendors after a few months, they’ve optimized their processes for onboarding and offboarding suppliers. Would it benefit you to be able to quickly and efficiently add and remove suppliers? Does it make sense to buy smaller lots so you can adjust to adapt quickly and make more incremental decisions?
And what about the long term? Small buys are one way to increase agility. Let’s take a look at another that will become more important.
How do I get nearer to market so I can adapt to change more quickly?
These are great questions for your future inventory strategy, but there’s another pressing question. What can you do today?
6. Minimize those moves
Don’t move inventory unless it is absolutely necessary. All moving does is add cost. Unless there’s a compelling, well thought-out plan (like rerouting in-flight inventory to a more seasonally appropriate location), your best option is to ship inventory from its current location in your distribution network. For much of that inventory, it means turning your stores into mini Distribution Centers (DCs), like Bed Bath & Beyond in the United States, and B&Q, subsidiary of Kingfisher plc, in the United Kingdom.
7. Ship from Store, if you aren’t already
How do you make every location in your network a Distribution Center? First you need to know what you have where. Do you have the manpower to get cycle counts done now? Even before stores reopen?
Once you achieve an accurate inventory picture, does it make sense to have a team in each store? Or do you have regional teams that move between stores, shipping some orders from each store each day? And if you’re not set up for standard courier pickups, can your staff do deliveries? Can you use a service like Uber Direct?
From now on, supply chain flexibility is going to be critical. To be flexible you need real-time inventory visibility, and the ability to adapt to change quickly. We’re talking flexible fulfillment location and network management. Fulfillment rules that are easy to edit. And faster onboarding and offboarding of vendors. Are you ready to face the new normal?
For more information on how Fluent Order Management can help you get better inventory visibility and more flexible control over your fulfillment network and order fulfillment processes, Request a Demo today.