Imagine you’ve found the perfect pair of shoes for your sister’s wedding. They match your outfit and are a nod to her ceremony’s theme.
The only catch? Your size is out of stock. To make it worse, the site doesn’t even say when the size will be in stock or let you sign up for a back-in-stock email alert. So you sigh and head over to the competitor’s store.
Every online shopper has experienced a similar scenario at some point. So, what can you do as a fashion retailer to prevent customer disappointment? One way to avoid stockouts is to implement an effective apparel inventory management system.
Ahead, you’ll learn how to manage apparel inventory, see some top software options, and learn best practices from other merchants.
What is apparel inventory management?
Apparel inventory management is the strategic process of ordering, storing, and tracking clothing, and accessory stock. The process helps businesses avoid overstocking and stockouts and maintain the right balance of stock to meet customer demand without using up too much capital.
Effective inventory management aims to optimize the flow of goods so your store can deliver what customers want when they need it.
📚Learn: Inventory Management: Everything You Need to Know (2024)
What are the types of apparel inventory management?
As your apparel business scales, your inventory management system will need to evolve, too. Manual spreadsheets may initially meet your needs, but you’ll soon need to move to an automated system.
Here are four types of apparel inventory management:
1. Manual inventory management
Paper-based systems involve tracking inventory using physical documents like stock sheets and sales ledgers. It's labor-intensive and prone to human error. When you first set up shop, you might use a manual system.
2. Spreadsheet inventory management
Some retail businesses use Excel spreadsheets or Google Sheets to manage inventory. This semi-manual method allows more flexibility and data manipulation than paper systems but still requires manual input and is prone to errors.
3. Software inventory management
Inventory management software automates most aspects of inventory control, like reordering, reporting, and forecasting. These tools often integrate with other business systems (POS, CRM, etc.) to streamline operations.
4. ERP systems
ERP (enterprise resource planning) systems include inventory management as part of a broader suite of business management tools, including finance, HR, and customer relationship management. These systems are best for large enterprises with complex needs.
5. Cloud-based inventory management
Cloud solutions provide real-time inventory tracking and accessibility from any device with an internet connection. They offer scalability and flexibility, so they’re suitable for businesses of all sizes that need to manage inventory across multiple locations.
Why is apparel inventory management important?
Other then making sure that customers get your products when they want them, fashion inventory management can lower your operational costs and boost your bottom line.
Reduce stockouts and overstocks
Effective apparel inventory management reduces stockouts and overstocks—common challenges that impact customer satisfaction and your bottom line. Maintaining optimal inventory levels ensures that popular items are always in stock, minimizing lost sales and customer disappointment.
Improve the customer experience
When you master apparel inventory management, you’ll have items available in the sizes and colors customers want. If shoppers feel they can rely on your business to have products in stock, they’ll be more likely to return.
Prevent excess inventory and reduce carrying costs
Excess inventory can be a massive overhead for retail businesses––it ties up valuable capital and uses storage space. By aligning your stock levels with consumer demand, you’ll avoid over-purchasing and reduce these expenses.
Improve financial reporting
By keeping track of inventory levels, costs, and turnover rates, you’ll get access to real-time financial insights. This accuracy improves the reliability of profit margins, cash flow analyses, and balance sheets, enabling more informed decisions. With better data, you can pinpoint areas for improvement and plan for future growth.
Prevent retail inventory shrinkage
Retail inventory shrinkage, including losses from theft, errors, and fraud, is costly for merchants. By implementing robust tracking systems, retailers can closely monitor their stock and detect any discrepancies earlier.
How to manage apparel inventory in a retail store
Some best practices remain the same regardless of the apparel inventory software you use.
Categorize your inventory
Create clear categories, including product type, seasonality, and demographics. Sticking to a system will simplify inventory tracking, replenishment, and analysis. It’ll also be easier to see stock levels for each product variety and item.
Implement a reliable inventory management system
Choose a system that integrates with your point-of-sale (POS) and ecommerce platform, giving you access to real-time inventory updates across all sales channels. By doing this, you’ll lower the risk of overselling and stockouts. Look for features like mobile accessibility, scalability, and detailed reporting.
Develop a systemic approach to stocking
Establish a regular schedule for stock audits and reorder processes to maintain optimal inventory levels. Then, forecast demand using historical sales data, seasonal trends, and upcoming promotions.
Set up automatic reorder points within your inventory software to trigger restocking when quantities fall below a predetermined level. This proactive strategy means you’ll always have popular items in stock.
Use barcoding and tagging
Barcoding lets you accurately track product movement throughout the store and during sales events. Attach barcodes to each item as soon as it arrives in your store, and make sure your point-of-sale system can easily read the tags.
Invest in a barcode scanner and label printer to fully automate inventory tracking so the process is less labor-intensive.
Conduct regular inventory audits
Schedule regular inventory audits to verify the quantities of items in your store and compare them against what's recorded in your clothing inventory management system.
These audits can highlight discrepancies due to theft, loss, or admin errors. Consider using cycle counting, where you systematically check different inventory categories throughout the year rather than doing a complete inventory count all at once.
Monitor sales and inventory levels
Keep a close eye on your sales and inventory levels so your stock aligns with customer demand. Use your inventory management system’s analytics tools to track which items sell fast and which don’t move as expected.
This real-time data helps you make better decisions about restocking, promotions, or markdowns. Set up alerts for when inventory levels are low or when sales patterns change. Proactive monitoring lets you maximize sales and reduce carrying costs.
Optimize your warehouse and store layout
Optimizing the layout of your warehouse or store can save your team time and other resources. Arrange your space to ensure that best-selling items are easily accessible and that you can add new stock without disrupting existing setups.
Use signage and organize sections to help staff locate items quickly, reducing the time spent on fulfilling orders or restocking. You could implement zones based on sales velocity—place high-turnover items near the shipping or packing areas to speed up the process.
Take advantage of dropshipping for hard-to-stock items
Dropshipping can make it easier to manage hard-to-stock items. By partnering with suppliers who can ship products directly to customers, you reduce the need to hold these items in your inventory.
This method works well for bulky, seasonal, or infrequently purchased products. Select reliable dropshipping partners to ensure product quality and timely delivery, maintaining your brand's reputation. This approach will free up storage space and minimize your financial risk on slow-moving products.
Use dynamic pricing strategies
Dynamic pricing strategies can optimize your revenue based on changing market conditions and inventory levels.
Use your software to track sales trends and stock levels in real-time and adjust prices accordingly. Increase prices on high-demand items with low stock to maximize profits, and consider discounts on overstocked items to accelerate sales.
Some tools can automate price adjustments for you. All you need to do is set some rules, and the platform will handle the rest.
Build relationships with suppliers
Building strong supplier relationships opens the door to better pricing, exclusive products, and first access to new stock, giving you a competitive edge in the market.
Start by establishing clear communication channels to discuss stock levels, lead times, and potential supply disruptions. Then, negotiate flexible terms, such as scalable orders and return policies for unsold items, which can help you adjust to changes in demand.
Train your staff effectively
Proper staff training means everyone will understand your inventory management systems and processes. As a foundation, ensure every team member understands how to perform stock checks, manage stock entries, and handle sales transactions accurately. Hold regular training sessions so team members are up-to-date on new tech or changes in inventory procedures.
📖 Read: Retail Staff Training: 10 Tips to Bring Staff Up to Speed
Plan for seasonality and trends
Analyze past sales data to identify seasonal peaks and trends that affect demand. Use this data to inform your stocking decisions so you have enough products when demand increases.
Being proactive will help you capitalize on popular items and avoid getting stuck with outdated stock.
Evaluate and adjust your strategy regularly
Set aside time at regular intervals—monthly or quarterly—to review your inventory levels, sales data, and customer feedback. Use this analysis to identify areas for improvement, such as stock levels or updating pricing strategies.
Prioritize loss prevention
Clothing inventory management software can minimize losses due to theft, errors, or fraud. Here are some actionable steps to prevent loss of stock:
- Implement barcode scanning: Use barcode or RFID technologies to track every item in your inventory from when it arrives until it leaves the store. This helps you accurately monitor stock levels and quickly identify discrepancies.
- Set up user permissions: Configure your software to define clear user roles and permissions, ensuring only authorized personnel can access sensitive inventory processes and data.
- Use automated audits: Schedule regular and random inventory audits within the software to cross-verify physical stock against recorded inventory. This can help you spot and investigate anomalies.
- Monitor transaction logs: Watch transaction logs closely for unusual activity, like abnormal discounts or returns, which can indicate internal theft.
📚 Learn: Effective Strategies for Clothing Inventory Management in Retail
Top apparel inventory management software
Not sure which apparel inventory management software is right for your business? Here are five user-friendly platforms best suited to the apparel industry:
1. Shopify POS
Shopify POS is the first choice of apparel inventory management software for merchants. The system makes offering a cohesive customer experience easy across online and in-person selling channels.
Key features:
- Perform accurate inventory counts for incoming orders with a barcode scanner
- See which products don’t sell so you can release cash and inventory
- Receive low stock warnings based on the current sales rate and lead time for each vendor
- Track small changes made to your stock levels
- Identify trends and plan for the future using reports about your locations and inventory
- Move products to different sales channels and locations
- Receive exchanges for purchases made online or at another location and instantly update your inventory
- Manage and fulfill in-store pickup orders directly from your Shopify POS
Pricing: Basic plans start from $39/month
2. Magestore
Magestore is an inventory management platform built for Magento users. The platform excels at syncing data across sales channels, warehouses, and stores. With a quick look, it’s easy to see how much stock you have in your inventory and how much you need to reorder.
The system is suited to larger retailers with multiple warehouses. It’s easy to select which warehouse to ship products to or which location to receive return items. You can also check stock levels in each warehouse and move items from one location to another.
Key features:
- Sync inventory across all sales channels in real-time
- Integrates with Magento POS system
- Automate order processing, from purchase to delivery
- Access detailed reports and analytics to see sales trends, inventory performance, and customer behavior
Pricing: Pricing is tailored to your business size and usage––contact Magestore for a quote
3. Lightspeed Retail
Lightspeed Retail is a cloud-based POS and inventory management system with robust features for apparel retailers.
One of its top features is letting retailers browse and buy from built-in supplier catalogs. Then, with built-in purchase orders, it’s easy for retailers to purchase inventory in seconds.
Key features:
- Keep track of products across multiple locations with details like size, color, and style
- Link your physical store with an online shop, keeping inventory synced and reducing the chance of selling out
- Get detailed reports on what’s selling, what’s not, and customer habits to better plan your stock
- Manage all your stores from one place with tools that handle inventory, reporting, and more
Pricing: Basic plans start from $89/month
4. Fishbowl
Fishbowl excels in businesses that require advanced tracking and manufacturing capabilities. It's also suited to apparel retailers who manage complex inventory needs, like tracking multiple product variations and sizes. Fishbowl also integrates well with other tools to help you create a cohesive inventory management system.
Key features:
- Manage complex inventories with options for tracking multiple attributes like size, color, and style across different locations
- Automate order processing from inventory to shipping, reducing errors and saving time
- Streamline receiving, picking, and stocking processes with barcode scanning
- Access detailed reports on inventory trends, sales data, and more
Pricing: Pricing is tailored to your business size and usage––contact Fishbowl for a quote
5. Zoho Inventory
Zoho Inventory streamlines retail operations from inventory tracking to order fulfillment. Given its user-friendly interface, it’s a great choice for merchants who are newer to inventory management.
Its native integrations to other Zoho platforms make it a solid choice for retailers already using the CRM or other tools.
Key features:
- Sync inventory and orders across multiple marketplaces and ecommerce platforms to ensure consistency
- Monitor detailed product attributes such as size, color, and style
- Automate reorder points, backorders, and other inventory tasks
- Access in-depth analytics to understand sales trends, inventory turnover, and customer preferences
Pricing: Standard plans start from $29/month
Improve your apparel inventory management
Improving your apparel inventory management starts with choosing the right software for your business. Moving away from manual inventory management will reduce inventory errors and minimize time-consuming tasks.
Proper clothing inventory management will help you keep customers happy and eliminate chaos.
Apparel inventory management FAQ
What are the key components of effective apparel inventory management?
The key components of effective apparel inventory management include:
- Accurate product categorization: Organize inventory into logical groups based on type, season, and demographic for easier tracking.
- Reliable software: Use robust inventory management software that integrates seamlessly with your sales channels for accurate stock levels.
- Regular audits: Conduct periodic physical counts to validate system data and identify discrepancies.
- Dynamic reordering: Set automatic reorder points based on sales velocity and seasonality to maintain optimal stock levels without overstocking.
- Data-driven forecasting: Analyze sales trends and historical data to predict future demand, ensuring you’re prepared for customer needs.
- Supplier relations: Maintain strong communication and negotiate flexible terms with suppliers.
How does apparel inventory management improve customer satisfaction?
Effective apparel inventory management improves customer satisfaction in several ways:
- Availability of products: Ensures popular items are in stock in the right sizes and colors, reducing customer frustration from unavailable products.
- Accurate stock information: Provides real-time updates on product availability, both in-store and online, helping customers make informed purchasing decisions.
- Efficient operations: Streamlines processes like checkout and returns, offering a smoother shopping experience.
- Quick response to trends: Allows stores to quickly adapt to consumer trends and demands by keeping relevant products available.
What technology can I use to improve apparel inventory management?
Here’s some tech that can help improve apparel inventory management:
- Inventory management software: Systems like Shopify POS, Lightspeed Retail, Zoho Inventory, and Fishbowl provide comprehensive tools to track, manage, and analyze inventory efficiently.
- Point of sale (POS) systems: Integrated POS systems ensure that sales data is immediately reflected in inventory levels, helping maintain accuracy.
- Barcode scanning: Barcode systems speed up inventory tracking and minimize errors by automating data entry and retrieval processes.
- Cloud-based solutions: Cloud technology provides real-time data access and synchronization across multiple locations, which is ideal for managing inventory at various storefronts and warehouses.
- Ecommerce integrations: Platforms that integrate directly with ecommerce systems like Shopify help manage online and in-store inventory.
- Data analytics tools: Advanced analytics can forecast demand, optimize stock levels, and identify sales trends to guide inventory decisions.
Why is demand forecasting important in apparel inventory management?
Demand forecasting is important in apparel inventory management because it helps predict future sales trends and customer preferences.
By reviewing past sales data and market trends, you can predict which items will be popular, so you stock the right products in the right quantities. This prevents overstocking and stockouts situations and optimizes inventory levels to meet customer demand.
