From demand forecasting to limited drops, retailers are addressing the challenge of unsold inventory through various methods
Bengaluru: With the boom of micro-trends fueled by social media, brands are in a constant race to produce the right merchandise. Consumer preferences shift rapidly, making it increasingly difficult for brands to predict demand accurately.
At the same time, the need to be present across all platforms—both online and offline—and offer a broad range of sizes, colours, and volumes has pushed brands to produce more products than ever before. In an effort to avoid disappointing consumers with stockouts, overstocking has become the preferred strategy to maximise sales.
This has given rise to the challenge of unsold inventory. Even though it has always been a nightmare for retailers, the problem is growing more pronounced each day.
Overstocking creates a cascade of issues, including financial strain, operational inefficiencies, and the dilution of brand value. It ties up capital that could be used for growth initiatives, increases storage and warehousing costs, and heightens the risk of obsolescence, especially in fast-moving industries like fashion and beauty.
To clear excess stock, brands may resort to heavy discounts, which can erode profit margins and devalue the perceived exclusivity of their products. Also, prolonged accumulation of unsold goods can result in waste, with items ending up in landfills, casting a shadow over the brand’s sustainability credentials.
In pursuit of healthier financial outcomes and more sustainable business practices, companies are increasingly recognising the need for a proactive approach to inventory optimisation.
Through discussions with industry experts, we have compiled a list of strategies to prevent and address overstocking issues…
Data-driven forecasting
Utilising demand forecasting that combines real-time internal data with external market insights such as customer trends, and seasonal fluctuations, enables brands to achieve a balance in inventory management.
Rahul Dayama, Founding Partner of Urbanic, a multi-category fashion e-commerce platform, says that, “Our advanced forecasting algorithms help us predict demand with precision, allowing us to order in small, carefully calculated quantities. This ensures we stay agile, minimise excess inventory, and maintain a sustainable supply chain.”
Stone Sapphire India, a company that manufactures toys, stationery, and homewares, uses enterprise resource planning (ERP) for all its internal operations, ensuring the data is captured at all stages of business operations.
“Going a step further, we have initiated the deployment of our ERPs at our stakeholders’ locations. Our retail partners are serviced through our on-ground team along with a simple, customer relationship management (CRM) that helps them get full visibility from ordering to dispatch to stock movements,” says Shobhit Singh, MD and CEO of Stone Sapphire India.
“This ensures all value partners are on the same page and can make informed decisions for stocking and sales. These systems provide real-time sales and stock tracking, helping us make data-driven decisions for restocking and order placement,” he explains.
Just-in-time approach
The just-in-time (JIT) approach aims to minimise stock levels by producing goods only as they are needed for sales. This lessens the need for large storage spaces and lowers carrying costs.
Harsh Lal, Co- Founder of The Souled Store, a pop-culture inspired merchandise brand, affirms that the brand employs JIT approach, ensuring that products are manufactured and shipped as needed.
“Regular collaboration with our suppliers allows us to adjust production schedules and restock efficiently. Additionally, we leverage a flexible warehousing system, enabling quick shifts in inventory distribution based on demand fluctuations,” adds Lal.
On a similar note, fine jewellery brand PNG Jewellers follow a defined schedule for reordering based on real-time data, ensuring that inventory is replenished only when required and reducing the risk of overstocking.
“Shorter lead times allow for more responsive ordering and reduce the need for overstocking. We also implement business intelligence (BI) reports which can track real-time stock levels and automate reorder points,” said Suresh Krishnan, Vice President – Sales at PNG Jewellers.
Limited-edition drops
The term ‘limited edition’ instills a sense of exclusivity and urgency, making the product more desirable, leading to faster sell-outs. It also acts as a tool for testing new styles and consumer preferences without the risk of large-scale production.
Moreover, the scarcity factor associated with limited drops often allows brands to command premium pricing, mitigating revenue losses that typically arise from deep discounting.
Indian beauty brands such as Blurr, Renee Cosmetics, 82°E, SUGAR Cosmetics, and Mila Beauté are churning out limited-edition collections, experimenting with industry-first products, and collaborating with celebrities.
Similarly, homegrown fashion brands like Manyavar, HUEMN, The Souled Store, Savana, Lavie, and are releasing exclusive lines, including intra-brand collaborations, pop culture partnerships, and holiday-themed collections such as those for Valentine’s Day or Halloween.
Methods of liquidation
If over-stocking has already occurred, retailers are forced to use liquidation tactics that vary depending on the merchandise. A clearance sale is the primary option most retailers choose.
Saahil Nayar, Co-Founder and MD of Mila Beauté, shares that the company employs strategies like exclusive promotions, end-of-season sales, and product bundling to reach new audiences. Certain items are repurposed for special initiatives, while select inventory is allocated to partnerships and events, enabling meaningful contributions.
Some brands shuffle and revamp the excess products by creatively reworking or repackaging products, allowing brands to breathe new life into items that might otherwise be left gathering dust.
PNG Jewellers refurbish stocks periodically, offering incentives to the sales team to focus on non-moving stock. “Aligning their interests with the goal of moving inventory, we also use our agreement with the vendors to allow exchange of unsold stocks, thus refreshing our inventory without incurring significant losses,” says Krishnan of PNG.
Activewear brand STRCH prefers reusing unsold inventory for events and product sampling to avoid offering discounts.
Stone Sapphire India leverages its extensive pan-India presence, recognizing that each region behaves differently at the retail level. By analysing sales data, the company swiftly identifies slow-moving products in specific regions or districts and efficiently redirects them to areas with higher demand.
