Dead Stock vs. Slow-Moving Inventory: How to Tell the Difference
Dead Stock vs. Slow-Moving Inventory: How to Tell the Difference
Products with low inventory turnover can result in increased storage costs and leave your shelves with no space for the latest items. The first step to solving this issue is to understand how to identify dead stock or slow-moving inventory, and the second is to figure out how to deal with it. To effectively distinguish between the two and optimize your product placement, planograms can be a valuable tool. It considers factors like product placement, shelving space, and customer flow within the store.
Nowadays, planogram manufacturers have come up with a solution called planogram services to help retailers with the shelf planning process based on consumer behavior and market trends. This helps retailers strategically organize their merchandise to enhance the customer experience and improve sales. In this blog post, we will explore how planograms can help you tell the difference between dead stock and slow-moving inventory and provide insights into effective inventory management strategies.
Identifying Dead Stock with Planograms
- Empty spaces: When creating a planogram, you will notice empty spaces on the shelves where products should be. These vacant spots are often indicative of dead stock that has not sold for an extended period.
- Out-of-place items: Dead stock may be haphazardly placed in prominent store areas or hidden away in less-visible locations. Planograms can help you identify products that do not fit the intended plan, signaling potential dead stock.
- Overstocked shelves: If your planogram calls for a certain quantity of a product, and you consistently have more on the shelves than the plan recommends, it is a sign that the item may be dead stock.
- Lack of customer interest: Planograms can also help you track customer behavior. If customers repeatedly pass by a particular section without showing interest, those items may be dead stock.
Strategies for Dealing with Dead Stock
When planograms reveal dead stock, you can take steps to avoid the causes of dead stock in the following ways:
- Repositioning: Consider moving dead stock to less prominent areas or combining them with other products in a more enticing manner.
- Discounts and Promotions: Incorporate dead stock into promotions or clearance sections to entice customers to buy.
- Inventory Auditing: Regularly review your planograms and inventory data to identify and address dead stock promptly.
Identifying Slow-Moving Inventory with Planograms
- Planogram compliance: Slow-moving items will adhere to the planogram but may not sell as quickly as other products. Their placement according to the plan can help you spot them. For example, grocery stores have noticed that their organic pasta collection is not moving as fast as expected. With the help of planograms, retailers can place them at eye level to make sure they are easily visible to the customers and boost sales.
- Variability in sales: By tracking sales data alongside your planogram, you can identify products with irregular sales patterns, indicating slow-moving inventory. In apparel stores, it is noticed that the sales performance of their seasonal collection has significant variability in sales, which results in slow-moving inventory. Retailers can adjust their merchandising strategy by providing discounts to improve their sales.
Strategies for Managing Slow-Moving Inventory
- Reevaluate placement: Adjust the planogram to feature slow-moving items in high-traffic areas or near complementary products.
- Pricing adjustments: Experiment with pricing strategies to encourage sales, like limited-time discounts or bundle deals.
- Inventory analytics: Continuously monitor sales data and inventory levels to make informed decisions about restocking or discontinuing products.
Conclusion
Planograms can help retailers differentiate between dead stock and slow-moving inventory, by strategically optimizing product placement, and enhancing the overall shopping experience for your customers. Identifying dead stock and slow-moving inventory beforehand allows retailers to implement effective strategies to minimize losses and maximize profitability in the retail business.
