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Lucky Brand Has a New Plan for Optimizing its Inventory

While customer expectations and retail operations have changed, in many cases, decision-making around inventory has not.

Lucky Brand decided to aggressively take on the issue of inventory planning in January of 2018 with the implementation of Celect, a cloud-based predictive analytics platform that helps brands and retailers make data-driven decisions on what to stock, and where.

At a breakout session at the Retail Innovation Conference in May, Lucky Brand’s VP of merchandise planning, Miles Barger, touched on the challenges the brand has faced and how the new program has helped to optimize stocking issues.

The LA-based clothing brand does 40 percent to 50 percent of its sales in denim, Barger said. With 250 stores spread out between specialty and outlets, along with an e-commerce and wholesale business, Luckywanted to merge its online and store planning systems and move away from an Excel-driven model, which, naturally, carried “a lot of room for error,” Barger noted.

Looking for an end-to-end, comprehensive planning solution that would work through all the stages of pre-season targeting, style planning, allocation and fulfillment, Lucky’s aim was to reduce the inventory carrying costs especially for the e-commerce business and in Canadian stores.

The brand needed “a holistic picture of inventory” that would allow it to “put the data to good use,” Barger noted.

The Celect platform allowed Lucky Brand to match warehouse inventory with a specific store’s needs. The program allowed for analyzing product performance down to specific attributes and details, like stripes versus solids or graphic prints.

Using the example of striped shirts being disproportionately popular in the Northeast (as New England is a haven for the nautical look, especially in summer), Barger said the program accounts for those sometimes unexpected regional differences, and makes recommendations on product replenishment based on store-specific sell through data.

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Historically, allocation procedures would give each store roughly the same inventory, based mostly what was available at distribution centers, and not necessarily based on a history of successful sales. Celect’s allocations are made in real time, instead of at the outset of the selling season.

Celect also helped Lucky enhance its store e-commerce fulfillment, Barger said. In the past, if an online order needed to be fulfilled in store, it was sent from the closest location to the customer. If that store was in one of the brand’s busier markets, the fulfillment of online orders could result in a depletion of needed in-store stock.

Now, once the brand’s order management system decides it needs to involve a store to fulfill an item, Celect helps choose the optimal store based on both availability and proximity.

As for the biggest implementation benefit, Barger said Celect had allowed targeted product to get to the best performing stores more quickly. Previously, he said, store staff would have to sort through replenishment stock to see what was needed on the floor. Now, all styles that are shipped to a location are relevant to that specific store’s needs.

Based on the program’s performance over the past year—which Barger said has saved Lucky Brand $5.8 million and increased its turn rate—Celect will take over allocation for all products in the coming months.