Articles

I Have So Much Stock To Clear!

We all know that what drives footfall peaks is newness.

But newness isn’t newness unless it is seen and noted by the customer. I can’t tell you how many clients of mine have been aghast at research that indicated their customer’s didn’t believe that they had anything new to show them in a period where they had major falls of new season’s merchandise.

Much of this had to do with a combination of visual merchandising failing to showcase the newness and an over-abundance of stock needing to be cleared. A cluttered environment is the politically sensitive way to describe it. But there is probably a four letter word which prefaces “- fight” that says it better.

What has happened to the art of merchandise planning? If newness is what drives peaks and best practice is moving toward higher frequency of newness, why are so many retailers failing to manage their inventory to better showcase newness?

Retail is the ultimate commercial endeavour because it produces direct cause and effect data and actions can be taken so quickly. But inventory management has a longer tail than most areas of retail practice and – as a consequence – it sometimes gets lost under the blood-rush of sales initiatives. Inventory management is arguably more strategic than the tactical nature of sales maximisation. But the two are increasingly becoming blurred as the old “you can’t sell it if it’s not on the floor” rule comes to force.

Merchandise planning should work back from the natural “pull” cycle of your customers and be overlayed with entrepreneurial “guesstimates” of the upside of stimulation initiatives. Open to buy is an aggregate of your volume, but product supply falls or deliveries (stock to distribution centre or stock to store) should work back from sell-through rates, which in-turn then aggregates back to your open to buy and supply agreements – including terms.

One of the by-products of good merchandise management is alignment of payment terms to order falls (making them close to cash-flow neutral or cash-flow positive) and alignment of stock levels in-store with purchase patterns. Today in a world where newness is king under-ordering is preferable to over-ordering. But managed in a way where there is always new product landing in-store in to maintain the volume of sales you need to meet sales and profit targets.

In the 21st century world of nano-second concentration spans, disposable fashion and an unquenchable thirst for newness, the discipline between merchandise planning and store sell-through cycles and processes is what separates a great store from a – how did I put it before? (a four letter word which prefaces “- fight”).

Well disciplined you won’t have so much stock to clear, your customers will be happier and more regular and your margins will be healthier.