Wholesale has an inventory problem. And yes we know, that’s not exactly news. Even prior to COVID-19, UBS noted inventory growth for apparel, footwear and accessories had outpaced sales growth for four quarters running -- with many companies bringing in inventory sooner than usual to get ahead of expected tariff increases. Not to mention, demand forecast in general has perplexed the industry for quite some time. Add to this the delayed deliveries and mass order cancellations of Coronavirus Spring, and a perennially smoldering issue just became a five-alarm fire.
Or did it?
Although brands across price points and categories must now move mountains, (of product, that is,) with a 30% average global reduction in demand, they also have more options at their disposal than ever before. As long as decision makers can pivot creatively during this time of business unusual, solutions exist to bridge gaps and even to build opportunities.
No one anticipated the compounding crises of Spring-Summer 2020, but all must look forward with amended outlooks and goals and do so with the tools and assets they currently have available. Excess inventory counts key among these and, like any financial resource, companies can leverage it in multiple ways. For survival’s sake, many brands need to quickly liquidate as much inventory as possible to fund short-term expenses like rent, salaries, and next season’s collections. But available-to-sell (ATS) inventory that doesn’t go in the first wave of sales efforts isn’t necessarily a loss -- it can pay off for the longer term when invested in nurturing future relationships and strengthening brands.
With brick and mortar at just the earliest stages of reopening and an unprecedented and unpredictable market ahead, retailers have a lot to navigate. They also have a lot of brands competing for their strained attention and resources.
Even with the limitations of social distancing however, brands can successfully engage with their partners. Instead of sending an uninspiring spreadsheet, they can now rely on virtual showrooming to create immersive customized shopping experiences. This technology allows them to curate content in line with retail partners’ buying histories and preferences and present it with interactive features like dynamic ‘shoppable’ video, 360 degree imaging and zoom. Such presentations give the brands who use them an edge. They give buyers a ‘look and feel’ experience of the products offered, enable partners to collaborate in real time on final edits, and build shopping confidence. To gain traction with buyers and drive results, virtual showroom technologies should play a leading role in every inventory management tactic discussed below.
The quick selling approach aims to extract maximum cash, while minimizing damage to the brand that discounting can bring. Of course, in the current climate promotional pricing may be hard to sidestep. But employing and combining a variety of approaches gets to the most lucrative results fast while lessening the downside.
At the same time as you go for the quick bill-paying win, think about longevity -- what will help the company to grow in the direction you want, and what investments can you make to get there
Putting an array of diverse and creative tactics in place should go a long way to solving current excess inventory problems. We do, however, need to look beyond putting out the immediate blaze. The issues that got brands into this corner go deeper than the current social distancing and lockdowns. As an ecosystem, our industry needs to get better at maximizing the valuable data resources we now have available, and prioritizing faster lead times and demand forecasting capabilities over immediate cost when making sourcing decisions.
Look for our fuller discussion in an upcoming blog. To learn more about JOOR, request a demo!