Inventory management emerges a crucial peg for small apparel retailers’ success

10 December 2024, Mumbai

In the bustling world of Indian fashion, where trends shift fast, small apparel retailers face a unique challenge: managing inventory effectively. The need to balance stocking the latest styles with the risk of unsold goods is a constant tightrope walk, one that can make or break a business.

For small apparel retailers, efficient inventory management is most important for profits and customer satisfaction. Stocking the right products at the right time is essential to meet fluctuating demand, minimize losses, and maximize sales. As Riya Sharma, the owner of a boutique in Delhi explains, inventory management is our biggest problem. They have to anticipate what customers want months in advance, and if they get it wrong, they are stuck with piles of unsold clothes.

Problems of small retailers

India's diverse climate and festive calendar create distinct seasonal demands. Summer sees a surge in lightweight fabrics and vibrant colors, while winter brings a preference for warmer materials and muted tones. Festive seasons, like Diwali and Eid, trigger demand for traditional wear and occasion-specific outfits. Sharma’s sentiment is echoed by a recent study by the Retailers Association of India (RAI), which found nearly 60 per cent of small apparel retailers struggle with overstocking, leading to significant losses.

Small retilers also issues of limited storage space as they often operate in compact spaces, making efficient storage a significant challenge. They lack capital for investing in large quantities of stock can strain finances, especially when faced with unpredictable demand. And keeping up with rapidly changing fashion trends can be difficult, leading to overstocking of outdated items.

For example, Jaipur Kurti Corner, a small kurti retailer faced consistent losses due to poor inventory management. They relied on gut feelings to predict demand, leading to overstocking of certain designs and sizes while

understocking others. This resulted in lost sales, frustrated customers, and clearance sales that eroded profits. By implementing a simple inventory tracking system and analyzing sales data, they were able to identify best-selling items, optimize stock levels, and reduce losses by 15 per cent within a year.

Table: How inventory needs change season to season

Tech to the rescue

Fortunately, technology offers solutions. Inventory management software, point-of-sale (POS) systems, and data analytics tools can help retailers track sales, predict demand, and optimize stock levels. "Investing in a good POS system has been a game-changer," says Rohan Verma, owner of a menswear store in Bangalore. It helps track what's selling, identify slow-moving items, and make informed decisions about future orders.

Various tech tools like Point of Sale (POS) systems that track sales data in real-time, providing valuable insights into customer preferences and inventory movement. Inventory management software that help automate stock tracking, predict demand, and generate reports, enabling data-driven decisions. And online marketplaces offer a wider reach and valuable data on customer behavior and trends. These tools offer a lifeline for small retailers struggling to manage inventory.

So by embracing technology, understanding seasonal variations, and adopting data-driven strategies, small retailers can navigate the challenges and stitch together a successful future.

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