What are the key challenges facing retailers since stores reopened?


Although retail footfall continues to rise, this recent boost to in-store shopping hasn’t, for the
most part, come close to compensating for sales that migrated online. It also fails to resolve
the unexpected volumes of inventory brands need to clear. Both trends only set to intensify
as we approach what may be the worst recession in UK history.


Written by Raffy Kassardijan, CEO of Parker Lane Group

Transition to E-Commerce

The most urgent challenge is the inevitable transition to e-commerce as consumers
increasingly switch to online shopping. However, e-commerce comes with its own set of
rules, and getting them wrong can be fatal. E-commerce has razor thin margins, including
the margin for error.

The challenge here is twofold: first, retailers need to convert their store warehouses into
fulfilment capacities for online sales and returns. Second, returns require a strategy. The by-
product of a successful transition is an increase in returns. Traditional retailers are not
equipped to handle online returns effectively: brick and mortar stores do not generate
anywhere near as high volumes of returns as e-commerce does. These are not issues that
can be resolved by 3PL (third party logistics) such as delivery companies either. Moving
boxes and managing returns are worlds apart: most 3PLs are not equipped to process and
salvage value from the piles of returns sitting in brands’ warehouses.

Returns management is a specialised service, requiring designated IT systems, tacit
knowledge and access to secondary markets. Brands need to explore their options
sagaciously, as the reverse logistics space is full of commercial blind spots that requires
specific expertise to navigate.

READ  Dior Announces A Tokyo Fashion Show To Present Kim Jones's Pre-Fall Collection

The most logical approach is to outsource the transition from offline to online to a specialised
partner and working alongside them in collaboration. In doing so, brands free up their
resources to focus on their core business while cutting down their costs and generating
higher returns.

Lack of Expertise Surrounding Excess Inventory Management

The cost of unsold inventory is one of retail’s largest inefficiencies. Unsold inventory is
expensive and holding stock erodes profit margins by the day. Given that sales are likely to
plummet alongside rising unemployment, stock overflow is a problem likely to remain for the
foreseeable future. However, there are solutions that are achievable for retailers at any
scale.

A paradigm shift surrounding unsold inventory is required. The first step here will be for
brands to place excess inventory management at the core of their business strategies. The
lack of proactivity in overhauling their inventory models internally translates into real financial
losses. Unfortunately, the average retailer isn’t prepared for this level of supply-chain
overhaul and probably isn’t aware of viable options for support.

In order to innovate, brands must shift their focus from in-house to collaborative: by investing
in the right partnerships, brands can achieve scalable and flexible solutions required to
monetise excess inventory effectively. In turn, this generates value that can be enjoyed by
the brand.

While external stock management solutions are fairly new, they are the only way forward.
Antiquated in-house approaches (such as selling to jobbers or destroying excess stock)
provide
no basis for innovation. They also fail to align with retailers’ changing needs and growing
scale in an on-demand economy.

READ  Everyone Loses in a Tariff War

Conclusion

By its very nature, fashion was made to change – the business of fashion is no different. Yet,
while the fashion world continues to rapidly innovate, solutions to inventory management
remain in stasis. Excess inventory and ‘waste’ will always exist, and retailers need to
recognise their importance. If handled the right way, cost can become an opportunity.

Solutions from the past cannot solve problems of the present or future. Radical re-thinking
and a comprehensive overhaul of the ‘old world’ is required to have the best chance of
surviving the new world’s challenges.

Although COVID-19 has proven the value of a genuinely circular economy, brands need to
consult with experts who can help them navigate out of the issues COVID-19 has magnified
to remain competitive in a post-pandemic world.

Parker Lane Group offers AI-powered reverse logistics solutions for fashion retailers. Parker
Lane Group’s data-driven approaches are revolutionising the way retailers and brands
manage, process, and sell returned and excess inventory. Our core service includes returns
management, excess stock monetisation, recycling and industry consultancy.



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here