As we step into 2024, many retailers find themselves facing a common challenge: holiday inventory leftovers.
It’s a familiar scenario – those special deals and seasonal items that were once hot commodities now linger on shelves and in warehouses, contributing to overstock.
Your key to keeping things moving? Real-time customer insights. If you collect data on sales patterns, customer service data, and customer behavior, there’s almost no end to the ways you can apply the insights you unlock.
In this article, we’ll explore 5 ways you can use customer insights to tackle post-holiday excess inventory. You’ll turn what might seem like a retail setback into a profitable opportunity.
1. Get a clear view of your stock
The key to effective inventory management is having a clear understanding of what sells, where and when.
New advancements in data analytics can help you break down the selling rate of each product at each of your locations. In-depth customer data empowers you to reallocate stock more effectively and design targeted marketing campaigns.
For example, you might notice that a certain product flies off the shelves in urban outlets but stagnates in rural stores. By moving that stock to a more fruitful location, you can optimize both sales and inventory levels.
This approach lets you position each product where it has the highest chance of success, significantly reducing the risk of overstock. Think of it as fine-tuning your inventory to meet customer expectations more precisely.
Inventory management requires an engaged, flexible mindset. As McKinsey’s analysis shows, making a consistent effort to understand and adapt to your inventory challenges is likely to yield significant improvements.
We’re talking about potentially boosting your sales by 3 to 7%, improving profit margins by up to 2.5%, and even increasing your cash flow by up to 15%.
For more strategies, take a look at How to Optimize your Inventory Turnover.
2. Use personalized recommendations to sell overstock
When you’ve got overstocked products, selling them off is the obvious solution. But you don’t have to resort to excessive discounts: the right technology can help you sell faster while retaining your profit margins.
Use real-time customer data to recommend overstocked items based your customers’ individual shopping habits. It’s like giving your customers a helpful nudge towards products they might like – but which also happen to be in surplus.
Employing customer intent data, this approach not only helps clear excess inventory but also personalizes the customer experience, enhancing customer service.
It’s well established that personalized online experiences are more effective than generic messaging. Increasingly, customers expect to be treated as individuals, just as they would in a local brick-and-mortar store. They want content and product recommendations that seem tailored to their preferences, cutting through all the irrelevant “noise” they encounter online.
Imagine that, with the help of your visitor tracking tools, you can see that a certain customer is browsing the “Table Linens” category of your website. This is a great chance to reach out with a relevant recommendation.
Using your live chat solution, you can immediately see which products in your inventory are currently overstocked. Noticing a certain velvet tablecloth in the list, you send the customer a message like this:
“Hi, Jamie! I see you’re shopping for table linens today. We’re currently offering 15% off our Prestige velvet tablecloth collection. Just enter code [discount code] at checkout. Let me know if you have any questions!”
With Breadstack’s live chat feature, you can immediately see overstocked products and easily offer a unique, personalized coupon for the item(s) the customer is eying. These “surprise” offers can help motivate hesitant shoppers in the right direction, cinching more sales.
3. Promote your slow-moving products
Everyone loves a good bargain, and strategically discounting your slow-moving inventory can really draw attention. The key is to strike a balance – make the deals tempting enough to capture interest, but maintain the value of your brand.
Here are a few ways to boost the impact of your promotions.
Schedule flash sales for success
Flash sales are limited-time promotion events that stimulate demand and create a sense of urgency based on fear of missing out (FOMO). This can be an effective way to sell off overstocked products quickly.
Use real-time customer data to help identify the most opportune time for your flash sale, taking into account peak traffic and customer activity levels.
Bundle complementary products
One of the most effective sales strategies is product bundling, a technique that involves packaging two or more products together and offering them at a discounted price compared to buying each item separately.
This strategy capitalizes on the psychological phenomenon known as the “perceived value.” When customers see a bundle of complementary items offered at a lower price, they often perceive the value of the deal to be greater than the sum of its parts.
Use customer and sales data to identify products that are often purchased together (or by the same customer across multiple orders).
Reach the right customers
Gather customer data to segment your shoppers based on shared characteristics, such as demographics, product preferences, and purchasing behaviour.
Rather than sending the same marketing content to your entire customer base, identify groups of customers and tailor your messaging, or even the nature of your promotions, to each one.
For example, you might create a group of customers who place high-value orders. Create a promotion for them that offers a free or discounted overstocked item if they spend a certain amount.
Or, if you have a number of customers who have purchased the overstocked item, take a look at what they have in common. This can help you build a profile of customers who may be especially interested in the product.
Looking for more tips? Check out 5 Promotion Tactics to Help You Move Overstocked Inventory.
4. Launch a loyalty program
Attracting potential customers is important, but don’t neglect your existing fan base.
A whopping 65% of business purchases come from returning customers. And, here’s a stat you might have seen before: it’s also 7 times less expensive to retain customers than to acquire new ones.
Loyalty programs encourage your existing customers to feel engaged with your brand, even when they aren’t actively shopping.
When you’re ready to design your own program, use real-time customer data to identify your highest-value, most loyal customers and get a sense of their preferences and motivations. Use metrics like customer lifetime value (CLV), order value, and order frequency, and don’t forget to analyze customer feedback.
Loyalty programs offer a unique avenue to move excess inventory. By offering overstocked items as rewards or incentives for signing up or reaching certain loyalty tiers, you can convert what was once a cost burden into a tool for enhancing the customer experience.
This approach is particularly effective for lower-cost items or products that have been challenging to sell. Not only does it help clear inventory, but it also adds value to the customer’s shopping journey, making them feel appreciated and more connected to the brand.
5. Optimize product positioning and visibility
Sometimes, products just need a bit more of a spotlight. By optimizing the way you display these items, you can encourage customers to notice and appreciate them.
Consider using real-time customer data to identify popular areas of your website or social media platforms, then feature overstocked products in those spots. Put extra effort into your product photos and descriptions to highlight benefits and unique selling points.
If you have received customer feedback for the product, take the most enthusiastic excerpts and display them prominently (with the customer’s permission, of course).
Let customer insights lead the way
By effectively gathering valuable customer insights, you can achieve smarter stock allocation, engage customers through personalized recommendations, creatively use loyalty programs, and strategically position products.
Not only will this go along way to addressing the overstock challenge; it will also elevate your customer experience and boost loyalty.
Breadstack offers features specifically designed to help you manage excess inventory:
- Data analytics – Gain insights into sales patterns and customer preferences.
- Personalization engine – Suggest overstocked items based on customer insights.
- Loyalty program interaction – Offer overstock as rewards in loyalty programs.
- Inventory management – Efficiently track and manage stock levels and demand.
Incorporating Breadstack into your operations tackles overstock and sets your business up for long-term success. Book a demo at Breadstack.com to discover how Breadstack can enhance your inventory management!
