Diving into the details of inventory management to optimize performance and maximize profit
With more than twenty years experience across the fashion industry, Henning Hausted, has gained both the insight needed to understand the complexity of retail as well as the recipe for success in fashion.
With a CIO background in wholesale, retail and e-commerce, as well as owning his own brand, Henning himself has first hand experience of the need for facts over feelings. He’s now the CEO and co-founder of GoFact – the Danish inventory and assortment optimization software that helps brands and retailers improve inventory management while seeing increased sales, better margins and higher profit.
We caught up with Henning to get his thoughts and insights into what’s happening in retail right now and what retailers should be doing to stay relevant and successful in the future.
Henning, you’ve worked in the fashion industry for more than twenty years. In your experience, what are the keys to success?
For a long time we’ve seen the need for optimization in the fashion industry. In my experience, success lies in the details and through working with hard facts and data. In a retail environment, this requires you to work with inventory and products from a non-felling-based angle. Facts are extremely important in the feeling-based fashion industry. Feelings are equally important, but the magic happens when you put feelings on top of fundamental facts.
I’ve seen fantastic results when retailers start sharing data in a transparent environment, where external brands are given the possibility to follow up on their own brand performance and can focus on replenishment as well as slow movers. When the follow-up is easy and simple to use – the retailer can focus on selling the products.
How is this done and what’s needed to enable retailers to work with facts?
To get your hands on the data you need to work with inventory and product assortment optimization, with the single goal to have your products available where your customers are.
Working with your inventory and your products during the season is therefore crucial in order to maximize turnover and profit.
Many might think this is very complex, do you share the same view?
Yes, having a wide range of products – many styles, colors, sizes and lengths – makes it complex to maintain a transparent and simple overview of your sales and inventory across all of your stores. The complexity also lies in the fact that the same product doesn’t perform identically across all stores, and therefore optimization is in the details.
Equipped with the right tools, you’re able to eliminate the complexity. But this also requires you to change your mindset and invest in the right tools for your business – enabling you to optimize your inventory and product assortment. This unlocks a completely new set of success factors.
You talk a lot about the importance of details, why is that?
Inventory and product assortment is all in the details. You need to know what product performs well, where it performs and when it performs. And, equally, you need to know what products don’t perform.
To be able to react to these details requires software equipped with a nitty gritty focus. For example, with industry leading inventory management software, you’re told exactly which details you need to focus on, and in the same process you are able to make decisions, and the result of these decisions are instantly activated in your POS and information is sent directly to your store managers. These processes save both time and resources.
If you were to recommend a setup suitable for retailers, what would that be?
The best-of-breed approach is the way forward for retailers. Find software solutions that are built for a specific purpose and work in perfect harmony with other solutions. This means you can shape your IT architecture based on your own needs while benefiting from the specific functionality different solutions offer.
For example, in a retailer’s IT architecture, GoFact is ‘put on top’ of an existing POS or ERP and does not require any complicated integrations in order for it to work. With the software in place, the complexity of inventory and product assortment optimization are simplified through predictive analytics and machine learning.
If we look at how this works with Sitoo, Sitoo handles everything that happens in-store, between stores, and between stores and online sales channels, while GoFact looks after everything in the product life cycle without actually selling the product. The two systems combined will handle the full product flow and create a win-win situation for the retailer. It’s this approach that every retailer should be taking.
What can a retailer expect when pairing a POS like Sitoo with a software like GoFact?
When investing in a best-of-breed approach like this, retailers can expect to sell more with higher margins – which is exactly what our customers do.
This is done by three things; transparency, simplicity and intuitive software with rich, built-in functionality.
The results have shown, time and time again, that retailers get improved gross margin, higher turn rate and lower inventory. Overall we see a GM improvement of +1.5% and more than 30% lower inventory.
If you are to give one last piece of advice to retailers struggling with their inventory and product assortment?
In all business development decisions you make, whether it be changing ecom, a mobile POS platform, or investments in inventory and product assortment optimization software, you must adopt a best-of-breed mindset.
GoFact is a part of our fast growing ecosystem. Like us, they are hugely ambitious and, through working together, we’re helping forward-thinking retailers work smarter, enjoy a far stronger ROI and maximise their profit margins.
Contact us to find out more