Warehouses Full of Stock: Sales on Standby or Out-of-Pocket Costs Falling into Oblivion?

The American clothing brand Destination XL has defined having too much inventory in stock as “the kiss of death” for a business.

Destination XL is a well-known and leading clothing retailer for tall and large men.

CEO Harvey Kanter gave an interview in which he addressed the problem of inventory, an insurmountable economic obstacle for many clothing companies.

Why do many companies find themselves with warehouses full of unsold goods that are difficult to dispose of?

Many CEOs and managers have a bad habit of “chasing their tail when inventory is excessive, blocking the entry of new items,” says Kanter.

Translated: many believe that warehouse stocks constitute a future sales opportunity and chase customers who, on the contrary, are looking for new products instead.

It is the turnover which includes the reorganization of the store with “fresh” products (as Kanter defines them), in fact, the factor that allows a store to be able to sell consistently.

But you can’t blame those who decided to place excessive orders, after having to face a slow (or even blocked) supply of goods for several months in 2021.

It’s a shame that this phenomenon has evolved into the wave of warehouse stocks, which has “hit” the retailers themselves who, unexpectedly, found themselves facing a drop in demand.

Company plans, therefore, are often in a critical positions specifically due to end customer demand, which changes quickly.

Kanter’s thoughts and solution come to life from this problem: by objectively and effectively evaluating the data of each DXL store, he realized that each store has its particularity and covers one (or more than one) ” “slice” of the market belonging to the niche of typical Destination XL customers.

“It could be a more popular brand, a size that is more suitable for the public, a color that is more trendy in that specific market area.”

This is how Kanter manages to keep inventory under control: by thoughtfully sorting supplies to stores, in a unique and relevant way depending on the data collected regarding the customers of the individual store.

If this might seem trivial, it is the development of the entire Supply Chain that follows that is not.

DXL needs non-standard clothing and sizes required by a specific category of customers. To avoid overdoing it and finding ourselves with warehouses full of stocks that are difficult to dispose of, it has modified the entire production chain:

  • it lowered its inventories until it obtained a lower number of units compared to the practices of other companies in the sector;
  • has decided to order pre-finished products, which can then be modified and transformed into other products, thus eliminating the problem of having goods ready for sale but stuck in the warehouse because there is less demand than expected;
  • has significantly increased the speed of shipping both from suppliers and to the end customer, thus reducing production times and limiting the need to order too many goods.

DXL avoids the common problems of other companies by successfully managing excess inventory without having to resort to constant promotions to liquidate excess merchandise.

Its effective management strategy helps maintain trade stability.

Kanter’s strategy, therefore, can be defined as a win-win, because on the one hand, the supplier is not overloaded with work and is supported by more accurate production planning.

On the other hand, the final company is always able to hit the mark: it buys the product, sells it quickly, and changes it with a new one, depending on the needs and tastes of the market.

The result is less risk and more profit for everyone.

What’s the secret?

Carry out an accurate analysis of the reference market and, above all, rely on specialized suppliers and partners to make the Supply Chain more effective and faster.

You must have a partner at your side who can guarantee fast and flawless shipments, combined with targeted production.

Only in this way can you reduce costs and maximize profits.

This is why Logistics4You is the right partner if you want to achieve this result because it can deliver the goods within 24 hours and collect them within 3 hours of the order.

Planning is not impossible if you have a supplier like Logistics4You by your side.

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