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Apparel’s Fixing Everything but its Glaring Inventory Problem

Inventory optimization has always been crucial for apparel retailers, but in the Covid-19 environment, the quest to sell slow-moving and excess inventory becomes even more complicated, as much of the extra merchandise lying in warehouses, distribution centers and stores alike is in danger of becoming obsolete.

Ronen Lazar, CEO and co-founder of Inturn, an enterprise software solution designed to empower brands to efficiently clear out this backed-up inventory through data-driven go-to-market recommendations, noted that the apparel and fashion industry is still reluctant to implement critical back-end technologies. In particular, he said apparel still lags behind other retail and consumer categories as far as adopting the perspective that leveraging data across departments is crucial to making productive decisions.

“Fashion could probably take some good notes from the CPG world, which is a lot more fast-moving and doesn’t have the same seasonal cycles, and with that there’s a real eye on what’s happening and what’s moving,” said Lazar. “Ultimately, with the leveraging of data, I think the fashion industry will be in a far better place.”

This makes digitization a primary challenge that the industry must tackle head on, particularly if there’s any way they want to get out of the pandemic in a positive position. Many of these inventory problems were persistent well before the pandemic spread, with Lazar noting that some clients actually saw 50 percent increases in slow-moving and obsolete inventory year-over-year in 2019. This is because much of the innovation in retail, unfortunately, has taken place in consumer-facing technology, instead of the back office.

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“Now Covid hits, and for fashion folks, you have an environment where stores shut down, goods were in transit from different parts of the world and literally showed up at companies’ doorsteps. What do they do with that? Those who were heavily reliant on brick-and-mortar and wholesale like department stores, they were cancelling orders so that created a lot of supply-chain disruption. Ultimately, there’s an oversupply and a mismatch on seasons. The time value of the goods didn’t present itself for an opportunity to just sell them.”

The expected high level of promotional activity in the upcoming season makes markdown optimization even more important, particularly since consumers at this point are entering the transaction expecting a discount. While markdowns might seem to be inevitable, apparel retailers now are tasked with being able to rescue margin on product before it is too late to sell it.”

“It’s a really tough environment in a sense that you have brand integrity to be concerned about,” Lazar said. “You have your plan that you’re trying to hit, but when you don’t see enough demand in the market, it becomes this chain effect where you have this promotional environment that has existed all this time and continues to gain steam. With the right level of promotional markdown and sales opportunity, I think we could see an interesting holiday season in terms of volume purchase, but the requirement to actually get that will require significant markdowns of product.”

Historically, inventory management processes are manual, tedious and time consuming, with product data often plugged into and pulled from spreadsheets. This data wasn’t as transparent from a cross-functionality perspective, as users could sometimes scrub data they weren’t interested in sharing with other teams, so financial, planning, sales and other departments might determine what products they want to sell at a discount without all the relevant data points.

Where Inturn steps in is by centralizing visibility and enabling real-time collaboration across brands, teams, departments and geographies so all parties can see what inventory needs to be moved, where it is it sitting and what strategies are necessary to take it to market.

“This capitalizes on inventory that otherwise is going to have to be destroyed or it’s going to have to be donated, that’s going to lose tremendous value in the process,” Lazar said. “It’s designed to move that process upstream and open your eyes effectively 60 days earlier, and collaborate so you can engage with the market and determine what is most productive on margin, and what prices protect the brand so you’re not setting yourself up for a channel conflict.”

The company claims its solution can bring drastic changes to the timing of an end-to-end product journey, with clients decreasing their go-to-market time by up to 60 days and shortening average transaction time by 55 percent. Additionally, Inturn says it can reduce operating expenses by 85 percent and increase margin recovery by more than 10 percent.

Inturn recently reported that its enterprise software solution is now an SAP Endorsed App, available through the SAP App Center. With the endorsement, the solution will be more entrenched in the SAP cloud infrastructure, enabling data to flow more quickly and easily across different systems, Lazar said.

“At the onset, pulling the master data is key to being able to react on the fly,” he added. “The truth is, it’s not even to react, it’s to be proactive about what precisely you are sitting on today that could be classified as slow-moving or excess at the snap of a finger, so to speak.”