One way smart retailers put the “retail apocalypse” narrative behind them is by investing in advanced analytics and demand prediction solutions that help streamline inventory planning. Startups like Celect, started in 2013 by a pair of MIT professors, are key players in this rapidly space that is giving leaders a tech-driven edge over laggards slow to invest, and a new injection of venture capital will advance this goal.
Historically, Wall Street punishes merchants holding hordes of inventory, largely because it’s a sign that they’ve purchased piles of products that no one wants to buy. On virtually every earnings call you’ll hear retail executives explaining how they plan to slim down their inventories or touting success with stock management. Inventory planning, as unsexy as it sounds, is a pretty big deal coupled with the cascade of store closures over the past several years.
Companies like Celect entered the market to give retailers a tool to solve these struggles, offering cloud-based allocation optimization, fulfillment optimization and plan & buy optimization systems that address disparate functions within the fashion supply chains. It’s attracted clients ranging from the ALDO Group and Urban Outfitters to Neiman Marcus, Lucky Brand and Polo that have wielded its offerings in service of fewer markdowns, healthier revenues and margins, stronger sell-through at full price, improve conversions for brick-and-mortar shoppers and reduce out-of-stocks.
“As a fashion retailer focused on delivering a quality product to customers in a time-sensitive manner, the ALDO Group is always looking to evolve and adapt our supply chain technology,” ALDO Group senior vice president of omnichannel Jennifer Maks said. “These fulfillment optimization initiatives have proven successful to date and we look forward to continuing this positive trend and further optimizing the efficient fulfillment of customers’ online orders from across our global network.”
Celect raised $15 million in a Series C round led by Fung Capital, which has previously invested in the firm, and new partner NGP Capital. Activant Capital and August Capital, both existing investors, also joined the round.
“Inventory continues to be both retailers’ largest liability and greatest asset, and in today’s volatile market there is simply no room for guesswork or reliance on backwards looking data,” Celect CEO John Andrews said in a statement.
Fung Capital partner Janie Yu stressed the importance of leveraging data and technology to meet consumer demands and offer localized assortments in an omnichannel environment. “In order for retailers to compete and thrive, they must embrace predictive analytics to optimize their inventory and modernize their supply chains, so they can meet consumer demand across all channels and down to the individual stores,” she said.