Don’t just find the inventory. Let’s fix the problems.
Let us share two numbers with you.
591 Billion.
580 Billion.
The first of those numbers is the combined US Q3 and Q4 eCommerce sales for 2023. The second? That’s the total US cost of inventory distortion for 2023. If ever there was a wake up call for the retail industry about inventory distortion, that’s it.
We’ve talked quite a bit about the problem; if you missed our breakdowns about the causes and effects of inventory distortion, be sure to check those out. At this point, however, it’s time to talk about the solutions—and just like you’d expect from a complex problem with lots of causes, there are a lot of possible options.
That said, the ways to address inventory distortion tend to break down into four broad buckets:
Inventory Detail
If you can’t describe it, you can’t track it.
It might seem silly, but the foundation for a lot of inventory problems is a failure to accurately, definitively define the product within the organization’s inventory. For example, when standing at the shelf, it’s easy to tell the difference between two different size medium, green and white floral shirts. Yet if pattern, size, and color are the only categories that your inventory system can offer, then problems are inevitable. Staff will get confused. Products will get miscategorized. Stockouts will get falsely reported, and ordering will be inaccurate. It might seem like a silly detail, but the fact is that modern retail deals with too many products, collabs, one-offs, specials, and other variables to be able to manage with only a handful of defining categories.
At KWI, we enable you to build up to 24 levels of hierarchies, manually enter new items on an ad-hoc basis (or add items in bulk if needed), and even include images and videos for each item. Your ability to clearly define each individual product within your system is the starting point for being able to accurately manage your inventory across its lifecycle and across your organization.
Purchasing Power
Inventory is like Goldilocks’ porridge—it has to be “just right.”
Your systems, stores, processes, and products are unique. Your customer trends and cycles don’t line up with everyone else’s—even with your closest competition. Your inventory needs aren’t static; they vary based on a wide range of constantly changing factors.
So why then would any of us imagine that a one-size-fits-all purchasing and replenishment system would help us solve the inventory distortion problem? If anything, these cookie-cutter “solutions” are probably making things worse by pushing everyone into the same ill-fitting seasonal patterns and buying processes.
Your retail organization needs a purchasing and replenishment system that is smart and gives you flexibility. It has to be able to ingest all your existing and ongoing sales, customer, and market data, spotting patterns and accurately predicting (and placing) appropriate orders and replenishments across stores and warehouses. It also needs to be flexible enough to let you manually adjust for upcoming events and changes, adjust min-max values to compensate for strategic shifts, or just placing a single manual order for one store only.
(Sounds an awful lot like KWI’s Merchandising platform, by the way.)
Smart Stores, Integrated Tagging
It didn’t walk off on its own.
There are a lot of technological and process explanations for where your missing inventory went. We don’t like to talk about it, but there are also some very clear human explanations for where it went. It didn’t grow legs and walk off, but it did walk off with someone who has them—whether it’s through shoplifting, cargo theft, fraudulent returns, and even staff losses. This kind of loss cost US retailers over $379 billion in 2022 alone, so it’s an issue worth addressing.
This is a physical problem that will often require a physical solution. Tools like smart shelves and RFID tagging give organizations real time updates on inventory status and alerts for theft or misplaced inventory—especially when coupled with in-store video analytics. These tools are a fantastic resource for third party inventory services, as well as for integrated merchandising solutions like KWI. We seamlessly integrate with their systems, sending them a master inventory list, and then uploading the completed data file for other teams and systems to pull from.
Analytics & Reporting
You need to see what’s actually happening.
Products themselves are only one piece of the puzzle. Your systems, processes, shipping, audits, and more all contribute to your overall inventory clarity and value. (This is why Unleashed estimates that 58% of retail brands and D2C manufacturers have below 80% inventory accuracy.)
Your organization needs visibility into everything that touches your inventory; tools like KWI Merchandising can help. It gives you clarity on receiving and transfers, pinpoints sales and return trends, accurately predicts gross margins on on-hand items, and even gets a jump on discovering current inventory discrepancies.
We’re Here to Help
At KWI, we’ve been working with retailers of all sizes for over 40 years, and we’ve seen all of these issues firsthand—in fact, if you want a deeper dive on inventory distortion, click here to see our infographic Where did Retail Sales Go?
Your inventory problem is unique, and a one-size-fits-all solution won’t bring the long term potential and success you’re aiming for. The good news is that KWI Merchandising is anything but cookie-cutter; our configuration based system means that we can tailor your solution to be exactly what you need.
Contact us today at sales@kwi.com or 1-800-873-5944 to schedule a consultation.
