Just as a pair of glasses can help you see more clearly, the proper lens on the merchandising landscape can bring clarity to the retail industry’s merchandising challenges. One significant game-changer in the eyewear sector is Warby Parker, which has revolutionized the way people buy glasses. 

By offering the convenience of ordering from home and trying up to five lenses at home, they have provided customers with the freedom to explore different options. Additionally, their innovative approach allows shoppers to seek a second opinion on their eyewear choices, addressing a common need. 

On the same scale of innovation, Lenskart has a 3D trial option to make shopping more convenient. They are the experts in providing seamless omnichannel, pioneers in the online retail world, and aceing manufacturing their own products. Indian eyewear market revenue is predicted to reach $5.58 billion by 2023. The market is expected to grow by 8.19% annually between 2023 and 2027, representing a compounded annual growth rate (CAGR). However, the optical industry still faces hurdles in effectively managing inventory and distribution processes.

What are the common merchandising challenges faced by the eyewear industry?

The retail eyewear industry, a hub of innovation and style, currently finds itself squinting at a daunting array of challenges. In the branded optical industry, the primary roadblock is grabbing the market share in India since the majority of the market is owned by unorganized eyewear vendors. There is extreme lead time due to the lack of manufacturers in India. Some of the other eyewear merchandising challenges are:

1. Replenishing JIT styles: Replenishing Just In Time (JIT) styles in the retail optical industry is problematic mainly because of inventory management challenges and a lack of diverse geographic distribution networks. These factors make it difficult to align production and demand accurately. Hence, brands struggle to merchandise i.e., maintain a wide variety of styles and ensure timely replenishment, making it challenging to implement the JIT model in the eyewear industry.
   
2. Replenishment of pack sizes: Ordering the wrong pack sizes can lead to excess inventory of certain styles and inadequate stock of others. Additionally, eyewear retailers often have limited shelf space and need to optimize their inventory levels to maximize display options. 
   Ordering pack sizes that are too large can result in overcrowded displays and hinder customer browsing. On the other hand, ordering pack sizes that are too small may lead to frequent stockouts and missed sales opportunities. Balancing replenishment with demand, available shelf space, and customer preferences is crucial for effective inventory management in the retail eyewear industry.

3. Replenishment with dynamic minimum base quantity (MBQ): MBQ represents the minimum amount of inventory that needs to be maintained to ensure availability for customers. Setting the MBQ too high leads to excess inventory of specific styles, tying up capital and storage space. On the other hand, if the minimum base quantity is set too low, it can result in frequent stockouts, disappointing customers, and potentially losing sales. 
   Striking the right balance requires accurate demand forecasting, understanding customer preferences, and closely monitoring inventory levels. MBQ is also vital to ensure the correct mix of products is available on the shop floor.

4. Challenges of style depth: With a mix of Over the counter and Just In Time models at the same stores, the precision of depth of a style at store becomes important; this often demands a close look at the demand each day and a proven forecasting model individual to each brand. Without automating the size sets and maximum stock coverage to be set for each store style, sales opportunity loss is inevitable.
   
5. Ensuring 100% core product availability in stores: Maintaining a comprehensive inventory of core products is an essential part of merchandising. It typically includes popular frame styles and essential lens options and requires significant space and financial investment. Limited shelf space may restrict the ability to stock all core products simultaneously, leading to potential stockouts and disappointed customers.
   
6. Identifying the most suitable replacement: Identifying and filling store gaps, as well as stockouts of specific styles at both stores and warehouses, is crucial. This involves selecting the most appropriate and unique styles that complement the existing assortment and meet customer demand. To achieve this effectively, a data-driven approach is necessary for determining the optimal size sets and maximum stock coverage. Considering the dynamic nature of the minimum base quantity (MBQ) and the inconsistent demand patterns at stores becomes essential.
   
7. Improper identification of NOOS, top sellers, and bottom sellers: Failure to accurately identify these items can result in frequent stockouts, leading to dissatisfied customers, lost sales opportunities, and imbalanced inventory management. Inaccurate reordering decisions led by wrong identification of NOOS, leading to overstocking or understocking certain styles, can result in increased carrying costs, tied-up capital, and missed sales. 
   Additionally, inaccurate reporting and data analysis hinders the ability to make informed business decisions, impacting forecasting accuracy, inventory optimization, and overall operational efficiency. Proper identification, precise reordering, and reliable reporting are critical for maintaining optimal inventory levels, meeting customer demands, and maximizing profitability in the retail eyewear industry.

8. Pullbacks: During stock pullbacks, it is crucial to maintain a minimum percentage (e.g., 80%) of the minimum base quantity (MBQ) to ensure the store remains operational and functional. By retaining this minimum threshold of the store capacity, sufficient inventory is available to meet customer demands and provide a satisfactory shopping experience. Striking a balance between clearing out slow-moving stock and preserving a core level of inventory ensures both efficiency and customer satisfaction in the retail environment.
   
9. Warehouse reservations: Maintaining a reserve of stock at the warehouse for new and fast-moving styles is crucial for brands to meet the continuous demand. Not planning a warehouse reservation can lead to a large presence of the product at all stores, followed by a sudden depletion. This might cause customers to encounter out-of-stock items, undermining their trust in the brand’s ability to meet their needs consistently. 
   Additionally, the absence of reservation systems can lead to inventory imbalances for their online sales and certain channels or customers consistently facing limited availability of fast-moving products. This can create a negative perception of the brand, indicating a lack of organizational efficiency and customer-centricity.

10. Reordering: Reordering in the retail optical industry takes into account several factors, including larger lead times, expansion, and online inventory. With a larger lead time, retailers need to anticipate future demand and adjust their reordering strategies accordingly to ensure a continuous supply. 
    Expanding businesses require careful assessment of inventory needs and potential adjustments in reordering quantities to support the growing business. Moreover, the rise of online sales necessitates maintaining an adequate online inventory to fulfill customer orders promptly.

Let us now take a look at some of our clients and how they won over their problems.

When you’re a company as expansive as Lenskart, handling a huge number of stores isn’t just a walk in the park. Not only are their stores vast in number, but their replenishment needs are daily and dynamic, adjusting for new style upgrades, customer demand, and even unique JIT styles. They face challenges in automating their processes, handling MBQ, ensuring the presence of core products in all stores, and efficiently managing stock.

By introducing algorithm-based solutions from Increff, Lenskart has managed to make sure their stores always have the right stock, at the right time, in the right place. Additionally, the Merchandising Software has ensured a minimum of 80% fill rate during pullbacks and allowed efficient international warehouse replenishment. As a cherry on top, we even delivered ready-to-present dashboards for internal presentations!

And what was the impact? A whopping 12% increment in Like-to-Like revenue in 2021-2022, lesser stock at the warehouse through faster reordering processes, smarter data analysis, and Lenskart becoming the most frequent user of Merchandising Software Business Intelligence.

Similarly, CFS Vision grappled with reordering and distribution challenges. Manual errors, time-consuming processes, and improper identification of top and bottom sellers were among the main issues, but with Merchandising Software, the solution was as clear as a 20/20 vision.

Specsmakers, too, were facing distribution challenges: analyzing demand, allocating products correctly, and avoiding manual errors were significant headaches. But, with the Merchandising Software magic wand, these challenges were obliterated. Our smart merchandising offered fast and accurate allocation as per demand, ensuring that the inventory was in the right place, quantity, and depth.

The future of the eyewear industry

Algorithm-based data-driven solutions, end-to-end advanced automation, and granular data analytics are just a few of the cutting-edge technologies shaping innovation in the optical industry. As technology evolves, eyewear businesses that adapt and innovate will stay ahead of the game.

No crystal ball is needed to see that the future of the eyewear industry is bright. With Merchandising Software, companies like Lenskart, CFS Vision, and Specsmakers are overcoming their present challenges and preparing themselves for future obstacles. 

In essence, these solutions are a bit like a new pair of smart lenses for the optical industry – offering a clearer view, correcting errors, and, most importantly, helping them see the road ahead. With such advancements, it’s evident that the eyewear industry is not just looking but moving forward into the future.

In the world of retail, a single merchandising decision can influence the trajectory of a season, the success of a product, and even the overall growth of a business. However, these crucial decisions can be fraught with inaccuracies and bias if not properly informed. This is where the power of data comes into play, acting as the lantern in the dark maze of merchandise decision-making.

The Old vs. The New: The Shift to Data-Driven Merchandising

Traditionally, merchandising decisions have often relied heavily on human intuition and experience. While these elements certainly have their place, they can also lead to inconsistencies and inaccuracies, which can impact overall business performance. The data-driven approach, on the other hand, eliminates much of the guesswork and subjectivity involved, enabling retailers to make more accurate, effective, and efficient decisions. Let’s explore how the mighty force of data can be harnessed to dispel errors and inefficiencies across the spectrum of merchandising operations. 

Planning: The Blueprint of Success

Merchandise planning sets the stage for a successful retail operation. It’s about accurately predicting what products will sell, when, and in what quantities. With a data-driven approach, businesses can delve into historical sales data, current market trends, and customer behavior to create precise, effective merchandise plans. Data-driven approach can further fine-tune these plans, minimizing the risk of over or under-stocking. It also enables merchandisers and planners to optimize inventory mix at stores level, with the computational power to go up to a granularity of design-level attributes of styles.

Buying: The Art of Selection

Making informed choices in buying is essential, involving not only what to buy but also how much. Retailers can utilize data analytics to examine customer buying patterns, preferences, and trends. This data-driven approach identifies potential bestsellers and underperforming products, enhancing assortment mix and reducing excess stock. 

To ensure optimal decision-making, retailers should perform comprehensive computations considering key attributes. Additionally, data helps identify both top-selling products and Never-out-of-stock items (NOOS) to adjust assortment mix effectively and capitalize on emerging trends.

Allocation: Every Store’s Perfect Match

Allocating merchandise across various stores is a complex task, especially for retailers with a vast network. Each store serves a different demographic, and understanding these nuances is critical. Data analytics can provide insights into regional sales patterns, individual store performance, and customer preferences, helping retailers to distribute the right products to the right stores, eliminating wastage and maximizing sales.

Replenishment: Never Missing a Beat

In the retail world, an empty shelf is a missed opportunity. Predictive analytics and real-time data can ensure that these opportunities are never missed. By monitoring sales data and inventory levels, a data-driven system can trigger timely replenishments, ensuring that key sizes are not missing and keeping customers satisfied. Further, data helps identify slow-moving inventory, allowing for pullbacks to the warehouse and replacement with more promising items. 

Additionally, allows retailers to curate collections of styles that are best displayed together and dispatch them to the appropriate stores. By maintaining different replenishment quantities based on style performance, retailers ensure efficient inventory management.

Inter-Store Transfers: A Balancing Act

At the end of season, Inter-store transfers are often necessary to balance inventory and meet local demand. Here, too, data plays a vital role. It can help identify which stores have excess stock of non-performers and which ones are running low on top sellers and key sizes, facilitating smart, efficient transfers that optimize inventory across the network.

Markdowns and Discounting: The Science of Sale

Markdowns and discounting are necessary evils in retail. However, they need to be strategic to protect profit margins. Data analytics can help identify the optimal timing and degree of markdowns based on product performance, inventory levels, and sales velocity. Moreover, personalized discounting strategies can be developed using customer data, ensuring that promotions resonate with shoppers and drive sales without significantly eroding profits.

Concluding Thoughts: Embrace the Power of Data

In an era of increasing competition and ever-changing consumer preferences, accurate merchandising decisions are more critical than ever. A data-driven approach provides the accuracy, agility, and insight required to navigate the complex landscape of modern retail.

By leveraging data, retailers can eliminate inaccuracies, bias, and guesswork from their merchandising decisions, resulting in optimized inventories, improved customer satisfaction, and healthier bottom lines. The future of retail is here, and it’s powered by data. Embrace the change and let data light your path to retail success.

How Increff helps?

Increff’s algorithmic-driven merchandising software redefines the paradigm of end-to-end merchandising processes. It equips planners, buyers, and merchandisers with insights to make informed decisions regarding inventory purchase, timing, quantity, placement, and markdowns during both pre-season and in-season periods. Uniquely tailored for fashion and lifestyle businesses, it features 100+ customizable, patent-pending algorithms which empower businesses to grow sustainably and profitably.

The software’s accuracy and efficiency lead to substantial improvements in various operational metrics. 

• Drastically cuts down 70% of man-hours spent in number crunching
• Allows decisions to be made 4X faster. 
• Strategic inventory management results in a 1.5X increase in inventory turns and a 20% reduction in inventory holding. 
• Helps businesses increase their full-price sell-through by 15%, enhancing the bottom line and margins by 4-5%.
• Optimizes supply chain processes, saving up to 10% in logistics cost. 

Increff’s Merchandising Software is, therefore, a game-changer for the industry, driving both operational efficiency and profitability. Click here to learn more about Increff Merchandising Software.

Good merchandising is like a classic wardrobe staple: always in fashion.

Picture this: You walk into a store and immediately feel captivated by the displays, the colors, and the overall aesthetic. You find yourself instinctively drawn towards certain products, feeling as though they were made just for you. This is the magic of merchandising – a carefully crafted experience that delights customers and leaves them coming back for more.

In a world where fashion trends change faster than the seasons, one thing remains constant – the power of great fashion merchandising. It’s the backbone of successful retailers and the secret weapon that keeps them ahead of the curve. But it’s not just about creating a visually stunning display; it’s about anticipating customer needs and delivering an experience that resonates with them on a personal level.

According to a recent study by San Diego State University, failing to get merchandising right could result in a 50% brand switch rate. That’s why a meticulous and thoughtful approach to merchandising is essential. From the placement of products to the use of lighting and colors, every element plays a crucial role in creating a memorable experience for customers.

As mentioned, merchandising is more than just displaying products on a shelf or rack. It’s a complex and nuanced process that requires a deep understanding of consumer behavior, market trends, and retail best practices. It’s about creating an immersive shopping experience that delights and inspires customers while also driving sales and building brand loyalty.

But exactly what is merchandising? At its core, merchandising is both an art and a science. It requires a keen eye for aesthetics, an understanding of product placement, and a flair for creative presentation. But it also demands a data-driven approach, with retailers analyzing sales data, monitoring inventory levels, and adjusting pricing and promotion strategies to optimize revenue. Merchandising also encompasses strategies for managing inventory levels and stock rotation to ensure that products are always available and fresh.

To stay ahead of the curve and stand out from the competition, it’s crucial to keep up with the latest shifts in the retail industry and implement the best merchandising strategies and practices. In this guide, we’ll explore the world of merchandising, from the fundamentals to the latest trends and techniques. We’ll dive into topics such as assortment planning, buying, and allocating, as well as inventory management and more. By the end of this journey, you’ll gain valuable insights that will help you create a memorable shopping experience for your customers and drive revenue for your business. Let’s dive in!

The winds of change in merchandising are picking up speed

Current Scenario

• With inflation rates skyrocketing to levels not seen in decades and consumer confidence taking a hit, managing the fashion industry has become increasingly pricey. The industry is feeling the pinch, and brands are under more pressure than ever to maintain margins and stay profitable in the face of these challenges.

• The accessibility and sharing of product information and trends have caused a significant shift in consumer preferences and behaviors. Consequently, consumers are frequently exposed to fresh ideas and products. As a result, a trend has emerged in which the lifespan of fashion products has notably decreased, causing brands to prioritize newness and innovation.

• Data and insights have become a necessity for brands. They rely on data to comprehend their customers’ preferences, behaviors, and purchasing patterns. Historical data analysis of sales, inventory, and customer feedback data allows brands to develop a more accurate demand forecast, identify emerging trends, and optimize product assortments. Moreover, data-driven insights enable brands to optimize pricing, promotions, and markdowns, ultimately leading to improved margins and profitability. 

• Consumers are increasingly conscious of how brands impact the environment and society. Across the globe, 60% of consumers consider sustainability an essential factor when making purchases. Over the past five years, 85% of individuals have modified their buying behavior to be more sustainable, indicating a willingness to change consumption habits and reduce environmental impact. 

As a result, brands are under pressure to adopt eco-friendly and sustainable practices, including waste reduction and building a sustainable and responsible supply chain. One in three consumers is willing to pay extra for sustainable products. So, companies must prepare for sustainability to become the norm rather than the exception, making sustainability a ‘climbing agenda.’  (Source: The Global Sustainability Study 2021 survey)

Taking action with the best merchandising practices

Let the data do the talking…

The era where brands relied on intuition and spreadsheets to plan, purchase, and distribute their products is a thing of the past. In today’s data-rich world, retailers can access vast amounts of data to help them make more informed decisions. 

By analyzing data, brands make more informed decisions and meet the 5 R’s (… the five rights) of retail product merchandising defined by Paul Mazur:

Let’s take a closer look at how a data-driven approach helps in each step of merchandising process.

Granular data analysis in merchandise planning and buying

Retailers incur significant expenses in buying merchandise, including shipping, transportation, delivery, and storage costs. Making incorrect purchasing decisions can result in doubling the merchandise purchasing costs. This is where a data-driven approach helps in merchandise planning.

Recognizing “Never Out of Stock” (NOOS) products is a crucial element of a data-oriented approach to merchandise planning. These are the top sellers and core styles that have persistent sales for a more extended period. By identifying NOOS products, retailers can ensure that these items are always in stock, reducing the risk of stockouts and lost sales.

To achieve ideal decision-making, retailers must perform computations at the granular level, incorporating multiple product attributes such as color, size, style, and seasonality. This level of analysis enables retailers to determine the ideal assortment mix and depth, ensuring that the right products are available in the right quantities at the right time.

Another crucial aspect of data-driven merchandise planning is analyzing past sales, revenue, discounts, size cuts, stock-outs, and exposure.

Benefits of data-driven merchandise plan:

• Decreased warehousing costs: By reducing unwanted inventory in the warehouse, inventory carrying, labor, and maintenance costs are minimized.
• Increased customer loyalty and lifetime value: Having products in stock that meet customer demand makes them less likely to leave empty-handed and will keep returning for more.
• Less discounting: By reducing unsold inventory, there is no need to rely on heavy discounts to clear stock.
• Lower chances of missed sales opportunities: With few out-of-stock situations and stocked best-selling products, retailers can minimize missed sales opportunities that their competitors may capitalize on.
• Smart inventory investment: By analyzing past sales and trends, retailers can make informed decisions about inventory investment and allocate their money to stocks that generate revenue.

Precision stocking: Smart allocation and replenishment

Using manual methods and general thumb rules to allocate inventory leads to issues like overstocking, stockouts, and suboptimal inventory health. On the other hand, with a data-driven approach, brands can ensure that inventory is allocated at the right depth, location, and time to maximize sales and improve inventory health.

The benefits include:

• True ROS (Retail On-Shelf Availability) based store style ranking ensures the best store style combinations are fulfilled, increasing sales.
• Optimized inventory distribution by identifying pivotal and non-pivotal sizes for each store and attribute group combination.
• Inter-store transfers and stock consolidation can be performed to correct for the loss of sale, inventory health, and assortment issues.
• Optimum depth for SKUs can be maintained at each store based on True ROS and required days of cover without any minimum or maximum inputs from the user. This approach improves store inventory health and helps avoid stock-outs or overstock situations.
• Suggestions for pullbacks of dead or slow-moving inventory pullbacks from stores to warehouses and replacements with better potential articles. This frees up space for faster-moving items and ensures that the store is always stocked with the latest trends and styles.
• Dispatch collections or stories of styles together to a store, which needs to be displayed together. This creates a cohesive shopping experience and increases the likelihood of multiple purchases.
• Different pools of replenishment quantity can be maintained at the warehouse based on the grade of the style, allowing for the allocation of more inventory to high-performing styles, resulting in increased sales and profits.

Other best merchandising tips and tactics 

Effective discounting/markdown optimization

Markdowns are essentially price reductions that retailers offer on their products to clear out old inventory, make room for new products, and maximize profits. However, managing markdowns efficiently is easier said than done. It requires a keen understanding of customer behavior, product performance, and market trends. This is where the data-driven approach comes in.

By analyzing sales data, inventory levels, and customer behavior in real-time, the tool recommends if the discount should be increased, decreased, or kept the same to improve its sales and maximize margin value. 

Here are some key benefits of markdown optimization

Maximizing ROI: Markdown optimization tools can help you identify the right set of styles to apply discounts to and the optimal discount percentage for each style for achieving the best possible sales and margin value.

Dynamic adjustments: Markdown optimization tools allow you to make dynamic adjustments to your markdowns based on real-time data. It means you can increase or decrease discounts for specific products and store locations based on their performance and stock status, allowing you to maximize sales and profitability.

Elasticity: Markdown optimization tools also enable rapid rollback on discounting if the rate of sale (ROS) doesn’t increase as expected. This elasticity ensures you can quickly adjust your markdown strategy if you do not see the desired results.

Flexible capping: Markdown optimization tools facilitate the flexible capping of the discount within different decision matrix combinations. This means you can set up different discount caps for different products and store locations based on their performance and inventory levels.

Style-level manual overrides: Finally, markdown optimization tools allow for style-level manual overrides for reordering and discounting decisions. This enables merchandisers to use their expertise and judgment to adjust markdowns for specific products and store locations as needed.

Localization of assortment

The traditional approach to inventory distribution involved having a few large warehouses that served a wide geographic area. However, this model has several drawbacks, including longer shipping distances and transit times, which can result in delayed deliveries and dissatisfied customers. To address this issue, retailers are adopting a new approach that involves building smaller fulfillment centers closer to their customers.

By using a pin code level inventory distribution system, retailers can ensure they have the right products in the right quantities at the right locations. This approach enables them to achieve faster delivery times, reduce shipping costs, and improve customer satisfaction. In addition, retailers can leverage data analytics to identify regional demand patterns and adjust their inventory levels accordingly.

Building a resilient supply chain is another key benefit of bringing fulfillment centers closer to the customer. By having multiple smaller fulfillment centers spread across multiple regions, retailers can mitigate the risk of disruptions caused by natural disasters, labor strikes, or other unforeseen events. This approach also allows them to be more agile in responding to changes in demand and market conditions.

By bringing fulfillment centers closer to the customer, retailers can not only improve delivery times and build a resilient supply chain but also create the phygital experience that customers are seeking right now. This is because it can reduce the distance that products need to travel and minimize inter-warehouse redistributions, resulting in significant savings in logistics costs and reducing the retailer’s carbon footprint.

Bridging the gap with Omnichannel

The traditional methods of allocating merchandise — having separate inventories for each sales channel, can no longer keep up with the fast-paced demands of the industry and can result in obsolete inventory, heavy discounts, or, worse, landfill dumping of unsold products. These challenges not only harm the environment but also hurt the bottom line of businesses. 

The concept of Omnichannel seeks to deliver this experience by unifying the entire retail ecosystem, breaking down silos between online and offline channels, and creating a cohesive and integrated customer journey. At the heart of this transformation lies inventory management. By integrating online and offline inventory, retailers can create a unified view of their stock levels, which allows them to offer customers the convenience of shopping across multiple channels and access an endless aisle of products, even if they are not physically available in-store. This feature enhances the customer experience by providing more options and reducing the likelihood of customers leaving the store empty-handed.

Another advantage of an omnichannel inventory system is the ability to offer omnichannel capabilities such as BOSS (Buy Online Ship to Store), BOPIS (Buy Online Pickup in Store), and BORIS (Buy Online Return In-Store). These options provide customers with the flexibility to choose the most convenient way to shop and return items while enabling retailers to leverage their physical stores as fulfillment centers.

By leveraging inventory as a strategic asset and integrating online and offline channels, retailers can provide a seamless shopping experience, increase sales, reduce waste, and improve their bottom line.

Newer Possibilities with AI-powered Merchandising

The possibilities of artificial intelligence (AI) technology are limitless, and it has found a new ally in merchandising. AI has become an indispensable tool for retailers, offering a plethora of benefits ranging from personalized recommendations to fraud detection. Its vast and varied applications make it an essential asset for any brand seeking to stay ahead of the curve in today’s competitive retail landscape.

A few use cases of AI in merchandising include

• Personalization: AI analyzes customer data to provide personalized product recommendations and promotions, leading to increased customer engagement, loyalty, and sales.
• Forecasting: AI predicts future demand based on historical sales data and market trends, aiding in inventory management and allocation decisions.
• Pricing optimization: AI determines optimal product pricing by analyzing competitor pricing, consumer demand, and other market factors, increasing sales and profitability while remaining competitive.
• Fraud detection: AI analyzes transaction data to identify fraudulent activity patterns, helping retailers prevent losses from fraudulent transactions.

The ball is in your court…

Brands that can tailor their strategic priorities to their specific situation will have the best chance of adjusting their business models to deal with current challenges. They will also be able to use these strategies to create a more flexible and adaptable merchandising capability that not only helps them weather the downturn but also positions them well for growth when it returns. But how does Increff help?

Bringing Science to Retail – Increff Merchandising Software

Reimagine merchandise planning, buying, and allocation with Increff’s intelligent algorithm-driven end-to-end merchandising software

Assortment Planning: Consider factors like seasonality, local demographic, product attributes, discounting, ,etc. to identify top sellers and slow movers. Personalize assortment at every store based on true demand for options, depth, and size ratios.

Allocation and Replenishment: Allocate inventory, as per demand, and improve the frequency of replenishments through our ARS solution. Experience consistent revenue uplifts by reducing size cuts, replenishing fast-selling styles, and optimizing overstocking and understocking within stores through inter-store transfers.  

Extract actionable insights with business intelligence and online analytics. 

What can you expect:

• 1.5x increase in inventory turns
• 4-5% improvements in the bottom line and margins
• 15% growth in full-price sell-through
• 10% savings in logistics 
• 20% cutback in inventory holding

Sales are the lifeblood of a business. However, with the ever-increasing competition and changing consumer behavior, it can be challenging to drive increasing numbers and revenue. The rise of fast fashion and the boom of the e-commerce industry has also made it more difficult for clothing brands to stand out and attract customers. 

A survey by Econsultancy reports that sales of fashion brands fell by 25% during the pandemic. And even after COVID-19 subsided, while online sales rose by £2.7 billion, the total sales dropped by £9.6 billion in 2021.

So, it is clear that the online fashion industry now has a significant impact on brands. And it is not as easy for companies to increase their sales without having a strong brand identity and online presence. Brands must also focus on their operational side of things like streamlining inventory management, optimizing allocation & distribution, and deploying a smart sales strategy to boost their sales.

In this blog post, we’ll explore some smart strategies to help clothing brands increase their sales and revenue.

1) Build a strong brand identity

The key to having a solid brand identity is ‘Consistency and storytelling.’ It is crucial to build an image your customers will recognize at a glance, whether online or in traditional brick-and-mortar stores. Your brand story should also align with the company’s values and mission and establish an emotional connection with the target audience. This leads to brand loyalty and an increase in sales.

When a brand builds a messaging that stays the same across multiple customer touch points and is visually unique, they are able to reinforce its identity multiple times. It also helps build a distinct identity that separates it from the competition. Forbes reports that companies that take their time building a consistent brand image across all their sales channels see up to a 23% increase in revenue.

Having hero products and building new stories around them is another great way to establish your brand identity. It often becomes synonymous with the brand, making it easily recognizable. For instance, the Hermès Birkin bag is one of the most recognized and coveted luxury handbags and has driven recognition for the brand globally. It can differentiate a brand in a crowded market by representing the unique value proposition of the brand and highlighting what sets them apart from competitors.

Additionally, since a hero product is often the top-selling product of a brand, it ties to sustainability and profitability. That’s because a brand doesn’t have to experiment and can count on its inventory of hero products always selling well and not ending up in landfills.

2) Re-strategize using past data

It is rightly said by Clive Humby that “Data is the new oil.” Brands can unlock a lot of growth potential by analyzing past sales information brands and identifying important sales patterns, trends, and customer preferences. That, combined with analysis of factors that contributed to high or low sales during a particular period, can help companies formulate their future sales strategy.

Data can also help segment the customer base based on age, demographics, preferences, and location. This information can help brands tailor their marketing messages and promotions to specific customer groups, increasing the likelihood of sales. Even McKinsey reports that brands that use data to offer a personalized customer experience see their digital sales jump by 30%-50%.

3) Streamline your inventory

A report by The Ellen MacArthur Foundation suggests that the fashion industry is particularly prone to overstocking, with an estimated 30% of clothes produced never sold. This major operational cost for businesses can be reduced significantly with some key practices. 

By managing inventory more efficiently, brands can reduce costs, minimize waste, and improve customer satisfaction. An effective buying and planning strategy that identifies the right inventory mix and assortment for stores and online channels is vital. It helps prevent situations like out-of-stock items, low fulfillment rates, and poor customer satisfaction. 

The idea here is to double down on the demand potential and not let interested customers go away without buying. It can be done by accurately predicting the true size ratios at the right granularity to understand which products you need in your inventory and in what quantity. You wouldn’t want to run out of your best-seller during peak sales, Right?

4) Optimize allocation and replenishment

Once you streamline your inventory, the next step is to optimize allocation and replenishment. This involves determining which items are selling well at which locations and then using that information to allocate inventory to the right stores at the right time. By maintaining the optimum depth for SKUs at each store based on the true rate of sales (ROS), brands can ensure the right inventory distribution.

You need to regularly analyze store-level sales data to identify best-selling items, underperforming products, and sales trends. Then, use this information to make informed decisions about product allocations and replenishments.

One key strategy for optimizing allocation and replenishment is using automated systems. They can help you ensure that your stores always have the right amount of inventory to meet demand without overstocking and risking excess waste. By automating the allocation and replenishment process, you can also reduce the time and effort required to manage inventory, allowing your team to focus on other essential tasks.

5) Inter-store and warehouse transfers

Transferring stock between stores or warehouses ensures that each location has sufficient and balanced inventory levels. This prevents stock-outs and overstocking, which can negatively impact sales. It also helps reduce the brokenness of products by consolidating size sets in one store location with the highest likelihood of making the sale.

When a brand has a chain of stores, it is obvious that not all of them will have equal footfall. This is where inter-store transfers can help by ensuring that high-performing stores do not run out of inventory while low-performing ones aren’t overstocked. It also helps brands consolidate all inventory at a regional level to have healthy stocks at the right stores to give the inventory a final chance to sell before the end of the season sale.

Inter-warehouse transfers also work similarly, taking into account regional demand. For example, if a brand’s south India warehouse is running out of festive wear during Pongal, it can transfer inventory from its northern warehouse to match the demand. It helps prevent inventory from lying around in warehouses where there is no demand, reducing the need for markdown to clear stock. At the same time, warehouses can move stocks based on regional demand to improve delivery speeds and reduce costs.

6) Implement a smart sales strategy

Most brands need a more proactive approach to discounting. They do not analyze demand in real-time to adjust their price accordingly, which results in higher price cuts during the off-season. This results in missed sales opportunities and losses that fashion brands find difficult to circumvent.

This problem can be overcome by implementing a smart sales strategy where the discount on the product will be increased or decreased by analyzing the style’s ongoing performance and stock status. For example, if you see a product is not doing particularly well at 10% off, the discount rate can be increased to 20% to clear the inventory. It is far better than selling the same product for a 40%-50% discount at the end of the season.

Brands must plan ahead by considering product lifecycle, seasonality, and upcoming sales events. This can help them manage inventory more effectively and reduce the need for last-minute, deep markdowns.

Increase your revenue by 20-25% with Increff

Increff’s Merchandising Software employs advanced data analytics to provide actionable insights into your sales, customer behavior, and inventory. This enables precise decision-making in areas like product selection, pricing, and promotion, helping you maximize sales and revenue by up to 25%. 

With Increff, you can manage your inventory more effectively, ensuring you have the right products in the right place at the right time. This reduces stock-outs and overstocks, increases sales, and reduces costs. A leading menswear brand has seen a 40% increase in sales for their consolidated inventory via IST. 

Additionally, our markdown optimization tool helps you strategically reduce prices on slow-moving items, further boosting sales.

With Increff, you’re not just adopting a technology solution – you’re partnering with a team of retail experts dedicated to helping you achieve your business goals. By leveraging our merchandising solution, you can expect to see a significant increase in your revenue, positioning your business for long-term success in a competitive retail landscape.