Best PracticeDemand ForecastingInventory Planning


Jan 31 2024 ...

From pain point to profit: The power of inventory rebalancing in fashion

The traditional approach to inventory rebalancing in retail, also referred to as “store transfers”, has its challenges. It’s time-consuming to carry out, hard to control, and often a source of pain for all involved. But today, new, automated and AI-driven approaches to inventory rebalancing are enabling fashion retailers to use a once-shunned merchandising process to their advantage.

In this article, we explore why these newer approaches to inventory rebalancing can be seen as an opportunity for strategic optimization leading to a reduction in markdowns and more full-price sales rather than a sign of poor planning.

Learn how major fashion retailers like Cortefiel, Style Union and Hackett London are leveraging Nextail inventory rebalancing which can improve sell-through by up to 3% and reducing time spent on manual work by up to 80%.

Inventory rebalancing doesn’t deserve a bad reputation

From early on in their careers, young merchandisers have historically been taught that inventory rebalancing in retail, or moving products from store to store, is a tactic employed only as a last resort.

In fact, retail industry leaders often advise against frequent inventory rebalancing, unless dealing with unique or high-ticket items, with the prevailing sentiment being that investing time and talent in initial planning and allocation is key rather than having costly team members pouring over analysis that store colleagues then execute.

But here’s the reality: While new technologies allow us to accurately predict demand, consumer behavior constantly changes and items will always find their way into the wrong channel or store. Thus, moving and consolidating inventory is an important final step in maximizing full-price sales.

And considering the complexity of current distribution networks and channels, sometimes covering demand by moving stock between points of sales makes even more sense than traditional warehouse movements. That’s because you can more quickly relocate items to where they are going to be sold while decreasing dead stock and freeing up working capital.

Why its time to let go of manual approaches to product transfers

Although these stock movements make good commercial sense for the Merchandisers and store teams involved, the issue is that calculating them manually is essentially impossible.

Determining the best point of sale for each individual SKU and monitoring the movements carried out by stores pose a mathematical challenge that goes beyond human capabilities.

So, what if there were a way to streamline the inventory rebalancing process to eliminate the need for exhaustive analysis and manual intervention?

An agile strategy for full-price sales all-season long

Imagine a scenario in which, with the touch of a button, retailers could receive and instruct stores with the optimal inventory movements at SKU/point of sale level, calculate potential benefits post-logistics, and track actual benefits after transfer and sales – all without the cumbersome administrative burden!

This paradigm shift not only saves time and energy but also reveals significant savings on markdowns, positively impacting the bottom line and ensuring a seamless process that aligns with sales goals and creates happier customers thanks to better product availability.

In fact, merchandisers might even be able to consider inventory rebalancing as an agile way to respond to market shifts, rather than a sign of poor planning.

The benefits of strategic inventory rebalancing

Retailers that leverage cutting-edge inventory rebalancing solutions walk away with the following benefits:

  • Less overstock and understock with robust solutions that are able to calculate all inventory, points of sale, channels and warehouses in order to identify. opportunities to adjust inventory positions to meet demand and sell at full price for longer.
  • Stronger profit margins by pinpointing where demand is highest for each unit and by joining up broken size sets. For example, fashion retailers working with Nextail have seen sell-through increase by up to 3%.
  • Fewer unnecessary markdowns, end-of-season leftovers and product waste by prolonging full-price sales and stock availability even up until the end of a season or a product’s lifecycle. By enabling retailers to consolidate and sell up to 86.5% of their end-of-season inventory, store transfers with Nextail both reduce leftovers and waste while freeing up storage space for next season’s intake.
  • Higher customer satisfaction due to better availability of desired products and sizes in stock
  • No more cumbersome, time-consuming manual work related to inventory rebalancing work for merchandising teams and fewer errors thanks to AI-powered automation. Nextail, for example, helps fashion retailers reduce time spent on manual tasks by up to 80%

Today’s complexity calls for a new approach to inventory rebalancing

So, why now? With constantly shifting customer demand and more complex distribution networks and channels the stakes are higher than ever.

The cutting-edge, AI-driven inventory rebalancing solutions deliver better bottom line and less waste while also enabling you to continuously align inventory decisions with demand no matter how it changes. What’s more, the best of these solutions are low-risk and low-effort but are able to deliver immediate impact.

Now is the time to start leveraging accurate demand forecasting and decision automation, leveraging inventory rebalancing as a strategic and beneficial approach to your merchandise planning.

Discover how major fashion retailers like Cortefiel, Style Union and Hackett London are leveraging inventory rebalancing to achieve more full-price sell-through.