Retail Inventory Planning for the Holiday Season, Post Covid

September 19, 2022
By Rhonda Stinson, Sr Functional Solution Architect at Plantensive

As Charles Dickens framed, “It was the best of times, it was the worst of times…” over the last few years in retail.  Families were tucked in their homes together, shopping with their stimulus money.  We saw both in-store and omni-channel peaking in most Categories.  That retail shopping explosion, however, created trials and tribulations for those trying to manage inventory.  We just kept ordering products to restock shelves that were quickly bare again.  Warehouses were almost empty.  All the while hoping that one day… one day soon, the order would be fulfilled.  We continued to spread products across the shelves to fill the holes.  Some retailers went so far as to spread out fixtures to make the store look less empty.

Fast forward to today, most retailers have an unprecedented amount of excess inventory, particularly in discretionary categories, stacked as high as possible in the back rooms, and unfortunately, pallets and boxes spilling out into the sales floor.  All of that inventory, that was previously sitting in manufacturing facilities or in a shipping container on the boats from overseas, has now been removed from trucks and is filling up space in stores.  The new evolution of the next chapter in this saga is… Where do I put all of this merchandise?

Now is the perfect time to capitalize on the expenditure of the products we have waited so long to receive.  We are entering the holiday season; that time of year when most consumers spend, on average, several thousands of dollars, over and above their normal spending habits.  In order to do that, we must find creative ways to get that merchandise out of the box and in a shoppable format and do so without losing a significant margin in markdowns.  Historically, the answer to removing excess inventory has been to run a markdown pricing program to make the deal too good to pass up.  Given the time period, we can look for ways to keep some of that margin in the bottom line.

Most retailers are hyper focused on planogram compliance, and for good reason.  Product replenishment is typically tied to planograms so without compliance, ordering becomes more of a ‘wild west’ activity.  However, in today’s current situation, compliance may not be possible without losing margin.  Work with HQ and/or Operations to get in sync with the plan.  This ensures store management flexibility to reduce aging inventory through systemic means vs. cutting margin.

Recommendations and ideas to consider:

  • Walk your store and look for opportunities in fixtures that you already have. In retail planning, we tend to use up premium areas to make that shopping experience pleasing, but many times we do not consider “flex” or “white” space.  Space Planners will use analytical data to fill up a fixture, at times, maybe even allowing more facings than a product really deserves to fill the space.  Consider this space as a prime opportunity to utilize.  Ask your replenishment department to reduce (or temporarily turn off) orders for those slower moving items to allow a reduction in facings.  This opens up space for shifting items and/or increasing facings based on the excess inventory.
  • Make the most use of prime space. The racetrack around the store could be used for dump bins, corrugated displays, freestanding racks, or other freestanding fixture types to use for merchandising space.  Don’t forget about opportunities for those larger footprint items that could be floor merchandised.  Those items are most likely taking up valuable gondola space.  Just ensure there are no trip hazards that could cause regulatory compliance issues.
  • Have smalls with peg holes? There are always clip strips taking up space in a back room. Use clip strips for excess inventory that is small to capitalize on cross merchandising a product that you may not have otherwise thought, especially if the cross-sell opportunity is a destination category. Recent shopper research can help advise on cross merchandising opportunities.
  • Make use of inexpensive corrugated fixtures for lighter weight but non-pegged items. The corrugated floor sitters can be ordered non-branded (or promote your brand) to use in areas such as in aisle, corners, around posts, etc.  Use the floor for merchandising areas where placing a fixture may not be feasible.  Remember your cross-selling opportunities and split department lines.
  • Still have inventory sitting around? Think outside of the box… literally. If you have areas that are in a vestibule, sidewalk, tent sale in a parking lot; look for lower price point, lower margin items that are not as much of a shrink risk to place in these areas.

We hope this is a thought-provoking article to help identify merchandising opportunities that may not have been otherwise considered.  This keeps the inventory out of deep promotion, while providing shoppers a great shopping experience, where they are sure to find amazing gifts for loved ones!