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Minimise stock to maximise sales

For the past decade, fashion retailers have enjoyed expansion through innovation, adding new stores, fascias and ranges to boost revenues.

For the past decade, fashion retailers have enjoyed expansion through innovation, adding new stores, fascias and ranges to boost revenues. But those days are gone.
For the foreseeable future, fashion retailers will need to pay serious attention to detail in a bid to maximise every piece of stock, drive extraneous cost out of the business and create a highly efficient, slick operation. A key, yet counter-intuitive strategy for maximising full-price sales is to adopt a store replenishment approach that is based on minimum in-store stock levels. Reducing stock towards a minimum credible display ensures more stock is retained in the warehouse for longer during the selling season. Prolonging warehouse stock availability enables the retailer to respond to actual sales variations across the estate.

It may feel wrong to leave stock in the warehouse but that strategy can result in up to an extra 5% of turnover landing on the bottom line. With confidence in the accuracy of stock information, sound replenishment processes and good algorithms to automate those processes, retailers can transform both the operational costs associated with replenishment and significantly increase the proportion of full-price sales.

Now, more than ever, retailers need good merchandising practices. By retaining more stock in the warehouse for longer and leveraging accurate sales information at store level, retailers can begin to fine-tune their selling-season replenishment strategies. Ensuring the right stock is allocated to the right store at the right time will reduce costs and maximise the value of every item.

Jon Clay is business consultant at fashion business systems provider Prologic

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