Inventory management is one of the most important factors in fashion business. Whether you’re a new or established brand, effective and organised fashion retail inventory management can be the ultimate difference between success and failure; particularly in today’s version of the fashion industry.
As trends change with greater velocity and the need for a strong omni-channel presence increases, so too does the necessity to learn how to manage clothing inventory effectively. Unless businesses employ these strategies now, they’re opportunities to become competitive and profitable will steadily decline. The bottom line is, brands need to be on top of all the clothes they carry – at all times.
In this article we’ll be discussing the importance of inventory management and how to manage inventory in retail stores using 5 effective and innovative strategies.
The Evolution of Fashion Inventory Management
For as long as fashion retail has existed, inventory management has been a crucial part of its maintenance. In the past, processes in the fashion supply chain were very localised, and trend cycles would last significantly longer than the modern, fast fashion counterparts of today.
But the legacy processes that were once adequate for this type of fashion retail inventory management are now falling short, with increasing significance. In the modern age, the growing impact of e-commerce and omni-channel sales means retail inventory is so much greater than simply managing stock for one shop.
Keeping track of online and international sales would be almost impossible today without investment in tech platforms like ERPs and SCM systems (see our glossary of fashion terms for more information), while areas like demand forecasting require much more efficient planning to avoid shortages or overstocking.
How to Manage Clothing Inventory with 5 Innovative Strategies
To avoid unwanted fluctuation of stock, loss of profit, and general disorganisation when learning how to manage inventory in retail stores and e-commerce shops, we’ve created a list of 5 key strategies you and your fashion business should follow.
1. Data-Driven Demand Forecasting
Thanks to the digital age, consumers have access to retail stores at all times and at their fingertips. This means that brands require a greater awareness of their data to keep a good handle on how their inventory is shifting throughout the retail process.
By forecasting and monitoring stock based on past sales data, fashion businesses can gain valuable insight into both their bestsellers and their slowest movers season after season. Analysing this data allows for more accurate predictions on future stock levels, and thus better inventory management across retail stores.
Predictive tools like AI are also becoming increasingly popular for this task. Machine learning technologies can provide detailed analysis on current market and sales trends as well as consumer behaviours, helping inform businesses on the most optimal ways to handle their inventory management.
2. Real-Time Inventory Tracking and Management
Keeping track of real-time data and stock movements is key for effective fashion retail inventory management. Mobile-based tools like RFID (Radio Frequency Identification) technology and IoT devices like sensors can be particularly beneficial for removing the manual aspects of stock counting.
Use of barcodes or digital tags is therefore considered essential for any business seeking accurate visibility of their inventory levels, particularly if they’re working across multiple channels or with varying pools of stock.
3. Just-in-Time (JIT) Inventory for Fashion Retailers
Just-in-Time (JIT) Inventory is becoming increasingly relevant for fashion retail. Originating in Japan, JIT inventory systems are defined as businesses that hold no stock of their own, but rather rely on third-party deliveries to arrive exactly as and when they are needed.
This method can help with reducing the carrying costs that come with holding stock in warehouses, as well as minimising the obsolescent waste of certain products due to fast fashion trend cycles. This is ideal for businesses that want to prioritise production and quick lead times over in-house inventory management.
JIT does, however, require a very strong relationship between brands and their suppliers.
The reduced carrying costs of JIT must also be considered against more frequent delivery costs, as well as a negation of bulk buying discounts from suppliers.
4. Sustainable Inventory Practices in Fashion
Like all areas of the fashion industry, learning how to manage clothing inventory in a sustainable way has become a key concern in fashion business models.
Not only are supply chains under the microscope due to increasingly stringent sustainable fashion regulations, but fallouts from the COVID-19 pandemic are also leaving brands with flashback fears over accidental overstocking and losses due to waste.
Proper inventory management through the use of tech tools can help minimise all these concerns, maintaining sustainable practices by reducing the amount of waste product brands produce and promoting efficient demand forecasting for future seasons.
With the retail supply chain causing 25% of greenhouse gas emissions worldwide, it is no wonder that many brands are also opting for circular fashion models to help manage their inventory; recycling waste products and repurposing them for new collections.
5. Leveraging ERP Systems for Optimal Inventory Control
When businesses are ready to become serious about their inventory management needs, ERP systems are the recommended way to go. Digitising your supply chain means always staying on top of stock levels and achieving a complete 360-degree overview of your business operations.
ERP systems can assist with inventory management by providing:
- Real-time visibility over stock movements in multiple channels.
- Reporting and analytics tools for accurate demand forecasting.
- Precise product tracking using RFID and barcode technology for enhanced traceability across the supply chain.
Clear and streamlined understanding of the way your fashion business operates can not only shape how to manage clothing inventory, but also how decisions are driven within the brand as a whole.
Conclusion
Like many elements of the UK fashion retail market, inventory management is constantly evolving to adapt to the new needs and behaviours of the modern consumer. Investing in the tools and strategies needed for effective fashion retail inventory management can not only help businesses get ahead, but also provide a backbone for the security of their futures.
Implementing a fashion-specific ERP system like Zedonk is a viable inventory management solution that will help you make this change. By reducing the errors caused by manual processes and providing streamlined communication across your entire business, inventory management will become increasingly simple to uphold. Contact the Zedonk team for a personalised consultation on optimising your inventory processes.
