7 sure-shots ways for H&M to solve their $4 billion unsold inventory challenge

What happens when you start baking ginger cookies because you love baking but there are no people to consume it all.

Strange isn’t it! We feel who wouldn’t like cookies and why won’t it sell. But baking more cookies simply because you like it without understanding the market demand and customer likes can get you into a deep sh*t hole.

This is exactly what happened to the big fashion house like H&M when they kept producing clothes in bulk but there was no demand for it and now that inventory is simply lying with them as dead stock. H&M says that it has a $4 billion unsold inventory challenge. The company was having plans to open up 220 new stores and expanding its eCommerce operations and hence it produced the clothes to fill up the racks. However, what the company failed to see was to study the on-going fashion and near future fashion.

Apart from that, the company must have thought of using a better inventory management strategy wherein they could predict the exact amount of clothes that need to be produced. Their inventory strategy just couldn’t match the supply with the demand.

“Retail is suffering across America’s malls and Europe’s high streets,”  says Sarah Kent of Businessoffashion.com. In such sensitive times, retailers need to thoroughly study the market before producing so that they can avoid getting into losses or big mess as this. H&M can overcome this $4 Billion inventory challenge by following a few simple steps like:

1. Manage the distribution centers efficiently

What when you hoard the best of your products in a warehouse in a location where there is no demand for it!

A company needs to primarily run a check through all warehouses and identify the distribution centers that are underperforming. This gives a clear picture of which products work where. “The idea is to get more of the material moving through the network at an appropriate velocity and doing it cost-effectively, while still providing the best service to customers.”

2. Run Promotional Campaigns

Taking refuge in using some of the ethical marketing tactics can help H&M during these troublesome times. Having promotional offers on products that are non-moving or slow-moving can be a win-win situation for both customers and the seller. Some of the hot promotional offers by leading brands are as follows:

• Buy 2 and Get 1 free
• Buy worth $ 500 and get a $100 discount on next purchase
• Special discounts when you buy from the brick and mortar store during a certain time period.

3. Bundling the products

Bundling of products is one of the smartest ways to sell more and attract more buyers. You can pair up shrugs with tops, skirts with shirts, shoes with tops, etc.

The key to successful bundling of products is to pair the slow-moving product with a fast-moving product so that you sell all the products without having to deal with any dead stock of slow-moving items. Bundling products will increase the average order value and provide customers happy shopping experience as they are getting more out of their shopping.

4. Sale! the word that all consumers wait for

Organize End of Season Sale or Winter Sale or Autumn Sale – Just any kind of sale would do as long as it offers discounts to the buyers.

However, there are certain things that you must keep in mind while providing discounts to your customers.

• Provide discounts on the items that are slow-moving. This way you would be able to sell it off instead of storing it in your warehouse as dead stock and the customer might buy it due to heavy discounts on it at the same time.
• Even while providing discounts keep your margin a little bit so that you don’t end up making a loss.

5. Make sure your online platform works fine

If you are faced with a lot of surplus products or returns then trying to sell it online is a sure shot to gain revenue.

In this modern digital world, it is essential to have a website that works perfectly as per your eCommerce needs. It needs to be updated from time to time and should be user-friendly. Listing the products online will increase the chances of sales and hence leverage you to get rid of your dead stock lying in your warehouse while making you earn decent revenue.

6. Make sure your logistics can work for brick and motor stores and online

Quick logistics is the key to excelling in the business these days. Consumers usually expect 2 days of delivery for their products. Therefore, ensuring that you can cope with the customer’s demand and the location is very much necessary.

7. Designs that customer wants to buy

Study the latest trends and fashion closely to understand what kind of clothes are in demand these days and producing them can sure increase the number of sales.

In a nutshell, it is time for H&M to realize that it needs to sort out its inventory problems before the time runs out or else it might register one of the biggest losses in the world of global retailers.