In a perfect world, demand for your company’s products would always be high, supply chains would always be efficient, and each and every one of your items would fly off the shelf faster than you could think to restock them. However, this unfortunately is not a perfect world, and no matter the size, industry, or history of the company, every single CPG business deals with slow-moving stock in one way or another. Slow-moving inventory not only costs you and your storefront partners time and space, but it also comes with the hassle of extra carrying costs. This means the longer that inventory collects dust, the more your business loses out on new opportunities, resources, and valuable capital.
Is your business suffering from slow-moving inventory (inventory that hasn’t sold for 90 days or more)? By addressing this situation with the proper tools and strategy, you can logically and profitably revamp stale inventory to send products off the shelves and into your target consumer’s shopping cart.
Keep An Eye On Stock
It can be difficult to understand when you even have an issue if you are not using the proper tools to monitor your inventory. Ensuring you have full inventory visibility will not only help you keep track of what products seem to be slow-moving, but it can also help you recognize any themes or similarities within your slow-moving inventory. For example, if you are a fashion brand, with the best of intentions, for any design there will always be a colorway that doesn’t keep up, leading to lower sales and higher inventory.
The best way to keep a watchful eye on your inventory is to analyze POS data. There are two main ways to analyze and track this data — spreadsheets and POS analysis software. But due to the nature of spreadsheets, they do not allow you to have full, up-to-date stock visibility, which in turn may cause you to fall behind on data by weeks or even months. Conversely, POS analysis software like Krunchbox gives you real-time visibility into your inventory. It is simple to set up automated reports to show SKUs with greater than ‘n’ weeks of stock based on a relevant run rate. Or conversely those with less than ‘n’ weeks. Simply having visibility gives you time to anticipate the problem and tackle it before it gets out of hand. Fronting up to a buyer with a proactive plan for shifting some slow moving inventory, is a whole heap better than being blind sided by the same buyer six months down the track!
Shift Your Inventory
Once you have determined which store locations are currently holding too much inventory and vice versa, you have a number of options for addressing the issues. In rare cases, you may be able to physically move stock between locations. Where there are obvious examples of one item selling poorly in one geographical area, but being out of stock in another geographical area, it may make logical sense to relocate the stock, depending on the value of the goods and the cost of relocating it.
Retailers are often reluctant to physically shift stock, but repositioning your slower inventory by moving it to a different location can give it new life and the chance to sell better due to a unique new audience who may not have been exposed elsewhere. Doing this can also help establish balance throughout multiple store locations and help kill two birds with one stone.
Review Physical Locations Within the Store
Another complimentary approach is to take the time to physically review where your merchandise is being displayed in the store itself. Sometimes the in-store location may actually be setting your product up for failure.
Is your product being hidden away in a section where there isn’t sufficient foot traffic or visitors? Is your merchandise being displayed around other products that are natural compliments (for example, if you sell hammers are they located near nails)? If your products are impulse type purchases, then proximity to complimentary merchandise is essential. Consider also the packaging, the point of sale materials, and even labelling of the product. What are the features and benefits that will help your product stand out from a competitive offering? In other words, are you helping your end consumer to make an informed purchase at the point of sale? Are the store staff ensuring that your product is being properly displayed and replenishing from the back when inventory is looking low?
By taking the time to visit stores and experience your product in the context of the category, you will gain the ability to empathize with your consumers and better understand what may be deterring them from moving forward with a purchase.
Explore Sales & Bundling
Sometimes we just get it wrong. Either you purchased too much, or the product is just not hitting the consumer need. It might be that the product is successful, but that variant, that color or pack size is just the least popular (there is always one!) Then it may be time to explore making your product more appealing through discounting, sales, coupons or bundling. This can be implemented in multiple ways.
Sales themselves can be extremely diverse and offer multiple opportunities to get creative with your marketing strategy. The most common approach is a markdown, often shared between retailer and vendor, but it is worth thinking creatively in order to make the sales relevant. For example, if your company operates within the fitness industry and the New Year is approaching fast, consider running seasonal or targeted New Years Resolution sales to naturally and relevantly attract individuals who vowed to get in shape this upcoming year. If time is truly of the essence, explore running a flash sale in order to create a sense of urgency and tangibility for your buyers.
Bundling is also a beneficial way to reduce slow-moving inventory without heavily sacrificing profit. Let’s say you are a cosmetic company whose newest eyeshadow palette is practically flying off the shelves, however, your latest lipstick and mascara line isn’t quite doing the same. Explore creating a bundle deal, which packages all three products together at an elevated price point. Strategies like bundling will help both your audience perceive this as a worthwhile and valuable deal, while in the backend it is also helping to get slower-moving inventory off your hands quickly and efficiently without sacrificing too much profit.
Want to learn more about how you can ensure your inventory is properly equipped to move quickly within the fast-paced commercial retail industry? Download our free ebook, Five Ways to Optimize Your Inventory, to explore in-depth tips over maximizing supply chain inventory, increasing ROI, and improving your relationships with both retail partners and consumers alike.