How to predict demand and avoid overstocking?

A guide to inventory optimisation solutions that maximise profits

We’re struggling with overstock this year, — complained one of the prospects we had a demo session with this week. — This is one of the core challenges our business has right now.

Well, welcome to the challenging new world of the post-COVID era. You’re definitely not alone who has the excessive stock problem. Actually, overstock is a big thing for retailers on a global level.

Look at the UK retail industry. According to the December report by Unleashed UK clothing and fashion businesses are holding 57% more stock compared to pre-pandemic levels as supply chain challenges are still in place. During the 4Q of 2022 overall stock available to the UK companies increased considerably compared even to the previous periods.

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Absolutely the same story is happening in the USA. Inventory levels are the highest they’ve ever been.

Germany?  No surprises here as well. We don’t have data on excessive stock for retail but sales numbers speak for themselves. Sales are plumbing starting from the end of 2022. And as no one was actually expecting this downward trend to be so steep it’s safe to assume that German retailers are left with millions euro worth items on their hands.  

But why is there so much fuss about overstock, or “bad inventory” as some retailers call it?  And how would you know that you’re facing it?

Are you managing bad inventory? 7 signs you have to take action

Usually it’s comparatively easy to diagnose but if you’re still hesitating here are the symptoms your business is infected with this disease....

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What is the cost of overstocking?

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You might want to write all these off as a cost of doing business but you should not do it. Because bad inventory is not a norm. It indicates that you have to take action and get rid of this problem once and for all.

Here’s just a short list of outcomes that bad inventory means for your business.

15% loss in profit margin

Bad inventory means up to 15% loss in profit margin, according to a 2021 McKinsey Report.

24% more chance for brand revaluation

Heavy discounting ruins your brand positioning. As your brand loses its value for the customers you lose your market share and find it more and more challenging to sell products that are in high-demand for your niche.

Get the full guide and learn how to avoid this