A footwear retail executive sheds light on the pressing issues, strategic responses, and the future direction of the sector.
The footwear retail industry is a significant segment of the retail market, characterized by its wide range of products from sneakers to dress shoes, to casual footwear and specialty footwear. The market consists of multinational brands and then smaller, local retailers vying for consumers’ attention. This dynamic retail industry faces a unique set of challenges and opportunities, especially in the realm of inventory management.
A conversation with a footwear retail executive sheds light on the pressing issues, strategic responses, and the future direction of the sector. Here, we delve into the intricacies of supply chain disruptions, sustainability, omni channel inventory balance, technological advancements, and data analytics in forecasting consumer preferences, offering a comprehensive view of the state of footwear retail today.
The five questions at the top of every footwear retailer’s mind and the answers one executive provided:
Question 1: How have global supply chain disruptions impacted the footwear retail industry, and what are retailers doing to mitigate the impacts?
Global supply chain disruptions make the need for enhanced resilience and flexibility even more apparent. Retailers have begun to diversify their supplier base, leverage technology in their supply chain and maintain higher inventory buffers for crucial items aiming to mitigate risks and ensure consistent product availability.
Increased costs of supply chains are leading to increased average units retail sales. The current climate is pushing consumers to pay even more attention to non-essential purchases. Therefore, it is becoming even more critical to retailers to buy strategically. Retailers must take a leaner inventory position and “do more with less while maintaining hyper focus on KPIs like margin and turns.
Supply chain disruptions have increased the delays of product arrival/increased lead times, which means a shorter window of selling for seasonal products. Retailers can mitigate product delays by writing key seasonal programs earlier to ensure on-hand inventory is available during peak times. Leaning into drop ship opportunities for shorter peak inventories with vendors who have that capability also may mitigate the impact of delays. Another solution is increasing direct shipments as picking up from ports versus from vendor warehouse, takes additional time.
Question 2: How are footwear retailers balancing their inventory between e-commerce platforms and physical stores?
It’s a balancing act between omni channel inventory optimization. The shift towards e-commerce shines light on the need for a seamless omni channel retail experience. Successful retailers are employing advanced inventory management systems to achieve real-time visibility and analytics, efficiently distributing inventory across online and physical channels, reducing stockouts and maintaining optimal inventory levels.
Different e-commerce strategies include an e-commerce only assortment, ship from store model and drop ship. Having a drop ship from store model allows for speedy delivery to customers, however, keeping in mind that some drop ship vendors require the business is a certain size or partnership level to access drop ship.
Question 3: What are the biggest technological advancements transforming inventory management in the footwear retail industry?
A: In the future, inventory management in footwear retailing will be revolutionized by technological advancements such as AI, machine learning and blockchain. With these technologies, there will be advancements in forecasting accuracy, reduced costs, enhanced customer satisfaction and more streamlined operations. AI powered tools for inventory planning and warehouse operations will lead to faster operations and warehouse management. By adopting these innovations, retailers can stay competitive in a fast-paced market, reduce operational costs, and improve customer satisfaction.
Question 4: Considering the fast pace of fashion and seasonal variability in footwear, how are retailers leveraging data analytics to predict and respond to changing consumer preferences?
Understanding and predicting consumer preferences in the face of rapidly changing trends and seasonal demands is crucial for a successful business. Retailers are turning to data analytics, analyzing sales data, social media trends, and consumer behaviors to make informed decisions about product assortments, pricing, and marketing, optimizing average unit retail sales (AURS) and profitability.
One thing retailers may not always think of, but need to leverage, is brand and vendor insights. Brands should be sharing purchases by region and demographic information for top performing models to help drive their future sales. Brands hold focus groups often and should be sharing that data with retailers to help them inform future purchase decisions.
Question 5: How has consumer behavior in the footwear market changed in the last five years, and what impact does this have on inventory planning and management?
Sustainability and environmental impact have become a crucial consideration in inventory management. It’s driven by a growing consumer demand for eco-friendly products and environmental awareness. Retailers are now integrating sustainable practices throughout their supply chains from sourcing materials to optimizing logistics. Companies are meeting consumer expectations and wanting to contribute to environmental conservation.
Embracing Change for Future Success
The footwear retail industry is at a crossroads, facing challenges that require innovative solutions and strategic foresight. From navigating global supply chain disruptions and embracing sustainability to optimizing omnichannel inventory and leveraging technological advancements, retailers are adapting to meet the evolving needs of consumers. The insights from industry executives underscore the importance of resilience, flexibility, and a consumer-centric approach in overcoming these challenges. As the industry moves forward, those who embrace change, invest in technology, and prioritize sustainability will not only survive but thrive, securing their place in the future of footwear retail.
An industry defined by trends needs leading tools and planners, like 4R to capitalize on the trends and maximize revenue. With 4R AI and cloud technologies, brands can increase APR leading to increased profits, reduce inventory carrying costs, reduce stockouts and minimize risks with optimized vendor and supplier orders.