Some retailers are facing a backlash after images that showed piles of clothes being destroyed surfaced. Overstocking is not a new issue, and retailers try to manage stock of unsold clothing through donations and resellers, but often there is too much inventory.
The problem has been averted by the pandemic, as many retailers had stocked for the 2020 spring and summer season, only to be forced to close during the lockdown. Many, such as fashion retailer Pink Boutique, are now fighting to bounce back
However, overstocking is far from simply a financial issue, it can be devastating to the environment as raw materials are destroyed, and massive amounts of energy are expended when producing and shipping products around the world, as well as the labour hours put into each product.
Those retailers who have already embraced modern technology have already optimised their inventory with advanced analytics, which can help prevent overstocking.
Why do retailers find themselves with an overstock problem?
The goal of any business is to maximise shareholder value, which means that retailers cannot afford to risk losing sales due to a lack of stock. The consequences of out-of-stocks can be severe, ranging from losing profits to losing customers.
It means that retailers will purchase additional stock, but many overcompensate and bring in far more inventory than they are able to sell.
Why should retailers be paying attention?
Time is running out for retailers to change the way they conduct business, as 80 per cent of shoppers in 29 countries believe sustainability is important, with many willing to pay more for environmentally responsible products and brands.
Digital transformation has introduced innovations such as advanced analytics and artificial intelligence (AI) which can help optimise the way business is done. Retailers using advanced analytics find they save money and can steal market shares from competitors.
Many leading retailers are already implementing this technology to focus on and solve the root cause of overstocking issues. By leveraging advanced analytics, they can optimise inventory to avoid lost sales without having to pay the price of overstock.
What is advanced analytics, and how can it help?
Advanced analytics and AI accurately forecast demand and recommend intelligent insights for decision-makers to rely on.
Retailers will be able to account for all the above when forecasting demand for products, empowering businesses to bring in the right amount of inventory, the right product mix, and all at the ideal time.
Traditional retailers might be put off by technology if it appears to be complex, especially when it uses terms such as AI, machine learning, and advanced analytics, but in reality, the technology is simple to use and is becoming more intuitive every day.
Not only are early adopters of this technology saving millions of dollars, but they are positively impacting the environment and communities around the world.
What many people do not realise is that much of this technology has been around for over a decade, and it has been tested, proven to be successful, and noted as the future of retail.
However, many retailers are choosing to stick to destructive, profit bleeding and outdated processes, meaning it is only a matter of time before the ‘old guard’ is made obsolete by digital transformation.
If you’re looking for retail sales forecasting software, talk to us today.
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