How to manage the inventory of your clothing store
Mon Feb 14 2022
Coffee & cornetto
Inventory management is the basis of a well-functioning business.
Despite being a critical component of any apparel business, inventory management is considered the "unglamorous side of a glamorous industry."
Many boutique owners agree that the biggest challenge in running their business is inventory management. According to a report published on Veeqo, 43% of retailers ranked inventory management as their number one day-to-day biggest challenge.
Worst of all, many small business owners don't see the importance of managing inventory. The same report shows that 43% of retailers don't track inventory at all. Such businesses are often at risk of running into cash flow problems.
That said, for any boutique to thrive in the ever-competitive marketplace, it must give precedence to inventory management and control. This post will explore the best practices to effectively manage the inventory of a clothing store.
What Is Inventory Management?
To define inventory management, we first need to understand "what is inventory."
Inventory refers to the goods and materials that a business holds for the ultimate goal of resale, production, or utilization.
Thus, inventory management is the practice of organizing and managing goods or stocks throughout the supply chain. Inventory management can also be defined as the part of supply chain management that aims to always have the right products in the right quantity and at the right time.
How to Manage Inventory Effectively
Due to the competitive nature of the clothing industry, a boutique can't afford to mismanage inventory. Why? Too much inventory can tie up cash in stock.
On the other hand, having solid inventory sourcing, storage, and management provides retailers with many benefits, such as having adequate cash flow at all times. Below are strategies an apparel retailer can employ to manage inventory effectively.
1. Planning in Advance the Inventory
A critical part of inventory management is planning and forecasting demand accurately.
However, this is an incredibly difficult task.
There are countless variables involved in planning, and it can be hard to tell what will sell more—but it's possible to get accurate estimates.
Demand planning can help minimize inventory shortages and ensure the right inventory is available in the right quantity and at the right time. Here are a few things an apparel retailer should consider when projecting future sales.
Trends in the market
Upcoming events or holidays such as Christmas
Seasonality and overall state of the economy
Last year's sales during the same week/month
While these factors will play a critical role in forecasting demand, it's advisable to put more weight on the market trends. The fashion apparel industry welcomes new trends each year, and the trending items will always sell more.
2. Automate Inventory Management
Managing inventory with spreadsheets and notebooks is doable.
However, it's prone to errors and can result in costly mistakes. Any organization serious about inventory management and control should invest in robust inventory management software. A good inventory management system can:
Help in inventory planning and demand forecasting
Keep track of inventory in real-time
Reduce costs and improve cash flows
Optimize warehouse organization
Allow for easy inventory analysis on any device
Prevent product and production shortages
Robust inventory management software makes stock management control easier and more efficient. The best software for inventory management should integrate well with other applications being used by the business.
3. Store Inventory Control
Store inventory control encompasses many activities that lead to efficient management of inventory and warehousing resources. These include but not limited to:
Auditing the inventory
Identifying low-turn stock
Auditing the Inventory
Even with a great inventory management system, apparel retailers must perform regular audits to ensure what's in the system matches the physical stock count.
Some retailers audit inventory weekly or monthly, while others conduct it once a year. Regardless of how often you do it, it's recommended to perform audits once in a while to ensure accuracy between your stock quantity and financial records.
Identifying Low-Turn Stock
Low-turn stock can impact profitability negatively since excess or slow-moving stock wastes both space and capital.
An astute move is to identify clothing items that haven't sold in the past 12 months and stop stocking them. There are many strategies a business can use to get rid of low-turn stock, including offering discounts, coupons, and special offers.
4. Consider Dropshipping
For apparel retailers pondering over how to increase sales without incurring inventory costs, dropshipping might be the best option.
Dropshipping is an order fulfillment method where a business doesn't keep the items it sells in stock. Instead, the store purchases the item from a third-party supplier then has it shipped directly to the consumer. As a result, the seller doesn't have to handle inventory.
Many retailers opt for dropshipping because they don't have to own or hold the inventory. This way, they don't have to worry about storage and other inventory holding costs.
The Bottom Line
Retail inventory management is critical to the efficient operations of a clothing store. With a robust inventory management system in place, an online retailer can do everything from stocking inventory correctly to managing cash flows to predicting future sales and more.
There is no "one best approach" to inventory management for clothing stores. You can easily find what works for your boutique by trying out the approaches discussed above.
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