What to do with excess inventory beyond the January sales

Understanding how to get rid of excess stock after big sales periods such as Black Friday or the Christmas campaign is key for retailers to start the year on a better footing without having to put their profit margins at risk.

Part of the problem of excess stock can be blamed on the growing tendency for consumers to buy knowing that everything can be returned. EAE Business School recently produced a study which highlights the high number of returns after big discount campaigns prior to Christmas, 50% of the items purchased during the ‘Black Friday’ campaign are returned to the shops.

How to get rid of overstock

Retailers have several strategies to get rid of overstock and start the year off on the right foot depending on the product they are selling:

• Divert the surplus directly to an outlet.
• Look for flash sales formulas and private sales through their own ecommerce or on their social networks.
• Reselling or selling to other retailers or distributors.
• Use of marketplaces for the sale of excess stock, such as Overstock in the case of household products.
• Relying on strategies such as Click & Collect or Ship from Store to use the stock accumulated in shops for new online orders or orders from other shops.

These are some of the options for retailers to lighten their warehouses without resorting to aggressive markdowns in the first months of the year that can influence the following months. Ideally, however, the amount of unsold products should be reduced through better assortment planning.

Artificial intelligence for assortment optimisation

More and more tools are becoming available to assist consumers at the point of purchase in an attempt to reduce cumbersome returns.

There have long been a wide range of solutions on the market that offer assortment optimisation capabilities to automate category management tactics. However, retailers often still struggle to find the right balance between hyper-localised assortments and common assortments, which is a particular challenge during the sales season.

This is an area where artificial intelligence could play an important role.

According to Gartner, by the end of 2025 all global retailers, both online and offline, will use artificial intelligence and automation to offer smaller, more personalised assortments to their customers, enabling them to reduce the number of options to choose from by up to 30%, thereby facilitating a reduction in the number of returns.