Expert Tips for Handling Inventory Surplus
One of the challenges home furnishings retailers are facing today is having excess inventory due to prolonged supply chain delays. Managing your inventory is a sophisticated balancing act. As a retailer, you want to ensure you have enough inventory to fulfill your customers’ orders but not too much that you have a hard time selling it. Fortunately, there are a few strategies that can help retailers navigate or prevent this current retail challenge.
“Excess stock is any product in your sitting inventory approaching the end of its life cycle that is not anticipated to be sold.” (binwise) When certain merchandise is not in demand, those products occupy space in your showrooms and warehouses leading to storage issues. Now you find yourself with increased costs from storing these unsold items rather than making space for new or more popular merchandise. Your cash flow is also tied up in your surplus rather than being readily available to bring in newer products.
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There are many reasons you may find your business with an inventory surplus. Common factors include inaccurate demand forecasting, lack of inventory audits, or supply chain challenges. However, sometimes an inventory surplus happens due to factors out of your control such as changes in the consumer market, unforeseen natural events, or economic fluctuations. Whatever the case may be, there are several steps you can take to liquidate your surplus:
1. Sell Online
One of the most important business strategies is to drive attraction to your products across all of your channels. Having a home furnishings eCommerce website enables you to reach a broader audience, increasing the market for your excess inventory. Integrating your POS to your eCommerce platform enables you to accurately display any discounts or promotions you want to run on these items. You could also highlight these items near the top of the search results on your product listing pages or move them to a different category to give primary visibility to your slow-moving items. Further, attention-grabbing product messaging such as “in-stock near me”, “last chance”, or “free shipping” is a simple yet effective way to entice consumers to make a purchase.
2. Offer Sales
Who doesn’t love a sale? Offering sales on products at risk of going out of season or reaching the end of their life cycle is an effective way to increase your ROI. Remember, when you mark down specific products you don’t have to slash your prices all at once. Retail software solutions with sophisticated and secure discounting logic can help your business with complex calculations, pricing and margin preservation, order of operations for multiple discounts, and even promotional schedules. Producing some cost for your merchandise sometimes is better than the alternative.
3. Bulk Discounts
Another way to use discounts to sell your excess inventory is to offer volume discounts. BOGO (buy one, get one), Minimum Purchase Quantity, Fixed Amount, or Percentage-Based Discounts allow you to set quantity-based discounts for individual products or products in a specific category. Incentivizing your customers to purchase bulk merchandise is not only a way to increase your average sale but also helps free up storage space.
4. Product Bundling
According to a study by Software Advice, a research firm for POS systems, 90% of retailers across all sectors have implemented bundling into their business strategy.
Simply seeing a bargain can sometimes be enough to entice customers to make a purchase. Product bundling can consist of grouping slow-moving products with complementary or exciting new products. You can sell bundles at a slightly lower price than if bought separately, which allows you to move merchandise without taking a big hit on your profits. Retail software with the flexibility to bundle products into hard or soft kits enables you to easily create combinations of SKUs you’d like to sell together.
5. Reorganize Your Warehouse
When you find your business has excess inventory, it may be time to consider the organization of your warehouse. Remember, product positioning is key. Restructuring your aisles, racks, and bins can ensure ease of accessibility to your highest turning inventory. Make certain that products bundled or frequently sold together are stored near each other and keep best-selling products closer to the front and seasonal products near the back or top of your shelves. Implementing integrated software with distribution tools can help maximize storage capacity, positioning merchandise in your warehouse in a manner that improves space utilization.
It’s vital for home furnishings businesses to implement integrated retail software with advanced inventory and merchandise management tools. Why? Modern technology is helping retailers achieve their goals of having the right inventory available in the right quantities at the right time. With advanced software and strategic insights, you’ll be able to significantly reduce costs associated with carrying excess inventory while increasing your profitability.
As an industry-leading technology partner for over 30 years, STORIS retail software can help you achieve inventory excellence. Here are a few of our expert tips to help keep your inventory balanced:
1. Buying Tools
There are many challenges retailers face when it comes to buying. STORIS’ integrated software contains must-have buying tools to help retailers balance supply and demand using data from historical inventory performance and current sales trends.
2. Just-In-Time Inventory Management
JIT is an inventory management method that focuses on keeping as little inventory on hand as possible. Instead of stocking up on merchandise, order smaller shipments to replace your inventory as you forecast and fulfill orders. (Forbes) STORIS JIT software balances the needs of your company, demand from your customers, shipping times of vendors, and real-time sales forecasting to establish precise on-hand quantities. This allows your business to sell more with less inventory!
3. Inventory Flow First-In First-Out
First-In, First-Out method assumes that the first items put into inventory will be the first items sold. This means your oldest inventory will be delivered to customers before newer inventory. (fitsmallbusiness)
STORIS’ inventory management tools enable you to utilize the FIFO method to optimize your inventory flow across your business and ensure your maintaining accurate valuations.
Every retailer knows that surplus inventory happens in the home furnishings industry. However, there are several ways to get rid of your excess inventory while maximizing the revenue potential on these items and minimizing losing valuable time, resources, and profit.
Inventory management software is critical in today’s retail environment. Not only can it help your business gain better control of your inventory, but it can also provide insights needed to make strategic decisions when planning assortments. If you find your business having surplus inventory, don’t panic. With an integrated solution, you’ll have all the tools needed to turn excess inventory into extra sales and increased customer engagement!