As consumer preferences shift rapidly, retailers in Bengaluru face the mounting challenge of unsold inventory, prompting innovative strategies for inventory management.
Bengaluru is witnessing a significant evolution in the retail landscape as brands grapple with the growing challenge of unsold inventory amidst rapidly changing consumer preferences, largely driven by social media trends. The increasing pressure to maintain an extensive product range across online and offline platforms has led many retailers to adopt overstocking as a countermeasure to stockouts. This practice, while aimed at maximizing sales opportunities, poses several challenges for businesses as they navigate the complexities of inventory management.
The accumulation of unsold goods has become a pressing issue, resulting in financial strain, operational inefficiencies, and a dilution of brand value. Overstocking ties up valuable capital, escalates storage costs, and raises the risk of product obsolescence. The consequences extend further, as brands face the difficult decision of offering significant discounts to clear excess stock, which can ultimately affect profit margins and the perceived exclusivity of their offerings. In a harsh reality, prolonged periods of unsold inventory can lead to environmental concerns, with products discarded, affecting sustainability efforts.
In response to these challenges, retailers are increasingly turning to innovative strategies aimed at optimizing inventory management and mitigating overstocking. One key initiative involves data-driven forecasting, which amalgamates internal real-time data with external market insights to refine inventory decisions. Rahul Dayama, Founding Partner of Urbanic, noted, “Our advanced forecasting algorithms help us predict demand with precision, allowing us to order in small, carefully calculated quantities. This ensures we stay agile, minimize excess inventory, and maintain a sustainable supply chain.”
Companies like Stone Sapphire India have adopted comprehensive enterprise resource planning (ERP) systems that provide visibility across all operations, ensuring that stakeholders can make informed decisions. Shobhit Singh, the MD and CEO of Stone Sapphire India, explained, “Our retail partners are serviced through our on-ground team along with a simple customer relationship management (CRM) that helps them get full visibility from ordering to dispatch to stock movements.” This operational transparency has proven effective in reducing excess inventory.
Another strategy gaining traction is the just-in-time (JIT) approach, where production is closely aligned with actual sales, reducing the need for extensive storage. Harsh Lal, Co- Founder of The Souled Store, confirmed this approach, stating, “Regular collaboration with our suppliers allows us to adjust production schedules and restock efficiently,” which facilitates quick adjustments based on demand.
Limited-edition drops have also emerged as a popular tactic for brands looking to create excitement and urgency around their products. Such strategies not only drive faster sell-through rates but also allow companies to experiment with new styles without the risks associated with large-scale production. Indian beauty brands and fashion labels have been quick to adopt this model, presenting collections that frequently feature partnerships and themed releases.
However, when overstocking inevitably occurs, retailers have developed various liquidation methods, with clearance sales being the most common option. Saahil Nayar, Co-Founder and MD of Mila Beauté, described the use of exclusive promotions, end-of-season sales, and product bundling as methods to attract new customers. Some brands, like PNG Jewellers, go a step further by refurbishing and offering incentives to sales teams to promote non-moving stock, thus reviving inventory that may not otherwise sell.
In addition to liquidation methods, companies like Stone Sapphire India are leveraging regional sales data to manage unsold inventory more effectively, redirecting products from areas of low demand to regions experiencing higher sales activity. This localized approach facilitates better inventory flow while minimizing the financial impact of overstock.
As retailers continue to face the dichotomy of consumer demand and inventory management complexities, these innovative strategies reflect an industry-wide shift towards more sustainable and financially healthy practices. Such methodologies are expected to evolve as brands further embrace data analytics and market intelligence, positioning themselves effectively in an increasingly dynamic marketplace.
Source: Noah Wire Services
