2023 Inventory… Too Much? Too Little?
Inventory. That was the theme unifying both attendees and exhibitors at the 2023 National Retail Federation (NRF) convention in New York City. More precisely, everyone I spoke to was interested in load balancing inventory to serve new retail fulfillment approaches striving to catch up with the blindingly fast evolution in consumer buying habits.
For retail locations, e-commerce, multichannel, and especially omnichannel sales, the question is the same: How do we match demand signals to supply without over-investing in inventory or, on the other hand, under-serving and losing customers?
Recent horror stories abound, such as the toy retailers sitting on millions of unsold items from holiday sales thanks to inflation, which dinged gift-givers’ disposable income. Kids’ toy preferences have changed too, driven by unplanned demand explosions brought to you by TikTok and YouTube influencers. Think Cocomelon and Mr. Beast.
In fashion, TikTok and Instagram influencers drive immediate global trends that turn sourcing and inventory decisions into a cold sweats nightmare.
In a time of shrinking margins the challenge is amplified. Overload to anticipate customer demand or take a bottom-line hit? At NRF, exhibitors offered many solutions to that question, largely driven by technology.
For example, suppose you had a slow-selling product at one location with too much inventory on hand. Wouldn’t it be wonderful to poll all your other locations and channels via AI and redeploy that product to your locations with more demand? That is possible.
What about over-reliance on historical sales data to predict future demand in volatile markets? There’s a solution that sits on top of historical data and seeks to match that against trends outside of that outdated dataset.
And what happens if you get it wrong? A reputation for poor returns management can do long-term damage to sales and your brand as repeated bad experiences drive consumers elsewhere. Additionally, the cost of returns management is rising due to higher shipping and labor costs, and inflation. But several new returns management solutions, both APIs and SaaS, reduce customer service friction and shield the balance sheet at the same time by maintaining customer retention. Paying attention to circular demand pays dividends.
Using the many available innovative solutions as part of your journey to evolving into a demand-driven enterprise is one sure way to answer the question of 2023 inventory: Too much, too little, or just right?