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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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Introducing New World's 2019 Christmas ad

  • News
  • November 19, 2019
  • StopPress Team
Introducing New World's 2019 Christmas ad

New World and Colenso BBDO have unveiled this year’s Christmas ad, showing the generous Kiwi tradition of inviting every available Tom, Dick and Harry to Christmas lunch, resulting in many mouths to feed.

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Raglan Coconut Yoghurt's Latesha Randall reports back from the US on what's hip and happening

  • News
  • November 19, 2019
  • Latesha Randall
Raglan Coconut Yoghurt's Latesha Randall reports back from the US on what's hip and happening

Latesha Randall is ​the co-founder of Raglan Coconut Yoghurt, a delicious dairy-free yoghurt born out of a beautiful town two hours south of Auckland. She previously documented the adventures of her company when it was a start-up in a column in Idealog – you can read it here. Recently, Randall traveled to the 2019 Natural Products Expo in Baltimore, USA and observed the food trends that were happening abroad. New Zealand foodies, take note: here, she reports back on what she thinks will be big contenders in the future food space.

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Outdoor goods retailers Cactus Outdoor and Kathmandu collaborate

  • News
  • November 19, 2019
  • The Register team
Outdoor goods retailers Cactus Outdoor and Kathmandu collaborate

Two prominent Kiwi outdoor goods retailers, Kathmandu and Cactus Outdoor, have collaborated to produce a line of certified ‘Buy NZ Made’ products which will be launched in Kathmandu stores around New Zealand on Buy NZ Made Day this week.

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Social scoreboard

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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Casual brows

  • Opinion
  • November 18, 2019
  • Sarah Dunn
Casual brows

As competition hots up between internationals and local brands in the beauty category, NZ Retail and The Register editor and associate publisher Sarah Dunn considers what comes next.

Read more
 
 

How New Zealand businesses performed in China’s 11.11 shopping festival

  • News
  • November 15, 2019
  • The Register team
How New Zealand businesses performed in China’s 11.11 shopping festival

This week marked Singles’ Day - a Chinese holiday run by mega-retailer Alibaba that, while still relatively unknown in the western world, is surpassing Black Friday and Cyber Monday in scale and sales. Alibaba reports it generated US$38.4 billion of gross merchandise volume this year.

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Building transparency in your supply chain

  • Opinion
  • November 14, 2019
  • Vanessa Thompson
Building transparency in your supply chain

Brands are under pressure to become more ethical, but how does this pressure apply to Kiwi fashion retailers? Unravelled Consultants founder and director Vanessa Thompson explains.

Read more
 
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