2020 Inventory Planning: How to Give Consumers What They Want
In the first few weeks of 2020, retailers are preparing for the challenges of the new decade. With an evolving consumer audience, more complicated supply chains, and international trade regulations, there are plenty of changes ahead. However, by examining the trends of 2019, the growth-oriented retailer can predict what consumers will want in 2020 and plan proactively. Here are three areas that will see renewed consumer interest this year.
Plus-Size Fashion is an Ascendant Market
In 2019, the plus-size fashion market surpassed the $30 billion mark. However, few retailers are investing at the scale necessary to offer this growing consumer demographic the options they seek. Based on our own data currently, for every single plus-size apparel item there are 750 regular-size items available. And with continued support from consumers for body positive culture, shoppers of all sizes are starting to prefer brands that cater to all sizes: 22 percent of millennials prefer shopping with brands that include plus-size models in their ads.
It’s clear that catering to plus sizes is not only the right thing to do for the 68 percent of U.S. plus size shoppers who are interested in participating in fashion trends, but also a smart business decision given the growing demographic of plus-size shoppers.
Retailers looking to expand their plus-size catalogue should start by examining their data in “regular” sizes to predict which pieces will be most popular this year. By analyzing trends in color, fabrics and styles, retailers can accurately predict what consumers are most interested in and invest in their own lines accordingly. Brands also shouldn’t be afraid to use “attribute analysis” on competitors’ catalogues to find which items and styles were least popular. By doing this, businesses can be sure to steer clear of failures in their own inventories. While there are many specialty shops that cater to plus sizes in women’s fashion, mainstream brands like Athleta, Adidas, Anthropologie, Apiece Apart, ASOS, and Harper Wilde have all begun to radically improve their selections to include more sizes. By examining their own data, these brands have been able to determine what’s been most popular with previous shoppers and make changes to offer their wares to more customers.
Sustainable Inventory Sells
As they become a large part of the workforce and gain spending power, millennials and Gen Z have been supportive of brands that prioritize sustainability and other ethical practices in the development of their products. One way retailers can capture or retain the loyalty of this huge shopping segment is by ensuring they have a sustainable inventory strategy in place to lower their overall carbon footprint.
Inventory waste is frequently cited as one of the most prevalent issues with retailers’ stocking systems. Retailers struggle to offload products from events like an end-of-season surplus due to products being returned or never purchased, and end up responsible for their continued storage or disposal. Improved inventory management will be key for retailers to better streamline each product’s life, from creation to purchase, and in the process create less waste, endear the brand to an increasingly environmentally conscious consumer pool, and drive more friendly cash flow with greater profits and fewer unnecessary costs.
Without proper inventory planning, retailers are left with dead inventory, which generates unnecessary energy usage and water consumption, increases an organization’s overall carbon footprint, and costs the U.S. retail industry $50 billion each year.
Reducing surplus inventory isn't inherently difficult, but it does require a cultural shift from top to bottom as well as a transformed business model. Managers in charge of buying need to analyze their historical data to better understand consumers’ desires and purchasing habits, then adjust their inventory to more closely meet those demands.
Retailers are scrambling to personalize product recommendations for individual consumers, but most aren't personalizing one of the most important attributes of a product: the price. This year, retailers will need to take care to customize their pricing to tailor to the regional and demographic differences of their consumer bases. One common myth retailers need to abandon is that consumers will only shop when there are deep price cuts. Contrary to popular belief, only 36 percent of consumers report waiting to shop from their preferred brands by using a coupon or holding out for a sale.
With brands and retailers facing more price competition from Amazon.com, which is able to refresh its product prices at least every 10 minutes, relying on sales to undercut their own prices isn't a sustainable strategy.
In fact, one of the only things retailers can do to guarantee more repeat visits from shoppers on their sites is adjusting their own prices frequently enough to compete with Amazon’s data-driven pricing. More than half of consumers report spending time comparing prices when they shop, with as many as 72 percent of consumers being willing to try a new brand in order to save money. That’s great news for brands looking to gain new customers, and retailers looking for an opportunity to negotiate more favorable minimum advertised prices that will allow them to compete with Amazon. Retailers should analyze their own data to create category-based pricing models that can account for different consumer behaviors and trends simultaneously, rather than a single rule that could alter prices based on the wrong factors.
New Year, New You
The expectations of 2020 consumers are higher than they’ve ever been, and retailers need to act accordingly. Consumers don’t just want to spend less; they want brands to be inclusive and sustainable and to meet them where they are. More inclusive sizing, less wasteful inventory, and prices that put the consumer first have become important inventory considerations for retailers in 2020. To meet consumer demands responsibly, retailers will need to listen to their data in new ways, looking beyond cost savings and considering how their inventory reflects brand values.
Sanjeev Sularia is CEO of Intelligence Node, a retail analytics and AI price optimization company that offers the world’s largest retail product index.
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Sanjeev Sularia is CEO of Intelligence Node, a retail analytics and AI price optimization company that offers the world’s largest retail product index. Prior to founding Intelligence Node, Sanjeev was the CFO for Exclusively.in, a fast-growing high-end fashion e-commerce site acquired by Snapdeal, and CFO for Shersingh.com, a private label e-commerce company acquired by Myntra. Sanjeev is a graduate of London Business School and a Forbes Technology Council member.