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Cashflow is king: How to keep your inventory moving

  • News
  • October 10, 2018
  • Sarah Dunn
Cashflow is king: How to keep your inventory moving

Every retailer has to walk a tightrope of investment. On the one hand, investing in stock ties up valuable funds which could be used to grow your business – but on the other, for most retailers there’s no sale without stock. We asked Cin7 founder Danny Ing how retailers can structure their inventory to maximise cashflow.

First of all, Danny Ing says, retailers should be moving from a “forecast mentality” where they’re looking to identify coming trends to a “replenishment mentality”. Trend cycles are increasingly unpredictable, he says, as are external factors like the weather.

“Forecast is almost impossible, or at least really hard,” he says.

Unpredictable weather cycles can have devastating effects on retailers who’ve invested in weather-dependent stock, such as heavy winter coats or rainwear. They’ve been implicated in disappointing financial results for several apparel retailers recently, with Hallenstein Glasson, H&M and Forever New all citing unusual weather in 2016 reports.

Instead of relying on volatile external signals, Ing recommends retailers structure their inventory management systems to be more agile so they can move with the times. This means:

  • Shorten the supply chain.
  • Reduce lead times.
  • Offer fewer variations of each product so you’re carrying less overall.

Ing says as part of this restructure, retailers should also assess the products they’re offering. Some products which are expensive and slow to sell – or, like a heavy winter coat, may in addition only sell under a certain set of external circumstances that are outside the retailer’s control - might be able to be replaced with a similar, faster-selling alternative. 

“There will be a series of product lines that are just too risky,” Ing says.

Retailers should try to think like Zara and prioritise flexibility over a simple cost focus, Ing says. SMEs can build big-business-style flexibility into their supply chain by contracting out services like third-party logistics (3PL) and using dropshipping arrangements with suppliers.

“If you’re not making [your product], maybe it’s better to have a dropshipping arrangement with a supplier.”

Finally, Ing suggests retailers consider engineering their stores to fulfil online orders. This is an approach that Australian apparel retailer Cue has successfully integrated into its New Zealand stores from June this year, along with click and collect, ‘store to door’ and ‘endless aisles’.

“We’ve essentially nine times the inventory of any existing store from online,” Cue’s chief information officer Shane Lenton told The Registerin July. “Having that store footprint is a great advantage for us over a pureplay in terms of speed to delivery.”

Head office oversees Cue’s fulfilment using a reminder system that works off 10-minute intervals, which ensures store compliance is high. If one item in the order can’t be filled, the store marks it as ‘can’t fill’ so head office can reassign it to a new store.

“The customer is oblivious to this, it all happens in the background,” Lenton said.

Ing says the new generation of customers is “really, really efficient” and will shop with the most flexible, agile retailer that’s personalised to their needs.

“The consumers have already figured it out but the businesses are slow to catch up,” he says.

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Picking up the scraps: The companies leading waste minimisation

  • Design
  • January 23, 2020
  • Findlay Buchanan
Picking up the scraps: The companies leading waste minimisation

In New Zealand, we discard 15.5 million tonnes of waste each year, an absurd amount for a small, agrarian, country at the bottom of the earth. Partly, the problem lies in our recycling systems – only a meager 28 percent of it is recycled. But, new radical solutions are being developed, we’ve already transformed water bottles into asphalt, plastic bags into clothes, and roofing into pavements. Plus, a company in the states, Joachim’s firm, plans to build a 53-story tower made with the waste, a vision for tall buildings and skyscrapers that could be made of plastic.

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2020 vision: What 2020 means for Dargaville retailers

  • News
  • January 22, 2020
  • Rachel Helyer Donaldson
2020 vision: What 2020 means for Dargaville retailers

In the final installation of our series looking at retail in seven New Zealand regions, we're examining Dargaville.

Read more
 
 

Container Door fined $54,000 over non-compliant bicycles

  • News
  • January 21, 2020
  • The Register team
Container Door fined $54,000 over non-compliant bicycles

Ecommerce retailer Container Door has fallen afoul of the Commerce Commission after supplying pedal bicycles which did not meet mandatory product safety standards.

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Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

 
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2020 vision: How Cambridge retail will perform this year

  • News
  • January 21, 2020
  • Rachel Helyer Donaldson
2020 vision: How Cambridge retail will perform this year

As part of a series looking at seven regional centres to consider what regional retail looks like this year, we're considering Cambridge.

Read more
 
 

Steve Mills becomes Countdown's new GM of Merchandise

  • Who's Where
  • January 21, 2020
  • Makayla Wallace-Tidd
Steve Mills becomes Countdown's new GM of Merchandise

Countdown has announced Steve Mills as the new general manager of merchandise.

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Larger retailers to discuss key issues in Retail NZ’s new group

  • News
  • January 20, 2020
  • The Register team
Larger retailers to discuss key issues in Retail NZ’s new group

Retail NZ is launching a new Leading Retailers’ Group for large and significant retailers. With its first meeting to be held in late February, the group will provide a safe outlet for senior retailers to discuss issues affecting the sector.

Read more
 
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