The control and management of product stock is key in any retailer, as it allows for the optimisation of resources and ensures that the customer experience is always exceptional, fostering customer loyalty. In this article, we tell you the keys to efficient stock management that will help you take your business to the next stage.
To retailers and especially to those specialising in cosmetics and Hair Care, as the demand for stock may depend on trends, seasonality, etc., efficient stock management is a key success factor, as it will reduce storage costs and ensure that every customer has what they want on your shelves at all times.
Efficient stock control not only ensures that you always have the right products at the right moment, it also helps to maximize your profits and avoid lack of stock or overstock situations.
Today, thanks to technological development, we have ERP solutions, predictive behavior based on AI, which can make inventory management much easier, but even so, there are many factors, such as trends, competitors’ actions, etc., that are beyond of endogenous solutions.
Moreover, it is a reality that not all retailers have a sufficient level of technological development to implement such solutions, which is why although we give them their place, in this article, we will focus on what is even more important than technological implementation, we will focus on how to optimize stock management from a strategic point of view.
Key factors to optimize hair product stock management
Despite the technological solutions that exist in the market, and the fact that the digitization of processes allows us to generate more data, which, if properly used, help us to have much more control over real consumption habits, transport times, possible shrinkage, etc., the reality is that only 20% of retailers and distributors have a sufficient degree of digitization to take advantage of the intelligence of their business.
In the majority of cases, we find the following challenges:
Lack of stock visibility: Without a full view of current stock, it is difficult to make accurate decisions about restocking levels and customer needs. Is one of the most common.
Lack of demand forecast. Trends in the beauty industry can change rapidly, and it is important to anticipate customer needs to avoid out-of-stock situations.
The consequences of both can be very negative, both in terms of shortages and overstocking. In the following, we analyze the key factors to be taken into account for the correct management of Hair Care product stock. Let’s classify them into two levels, internal and external.
Everything related to the manufacturing company, its distribution channels and the retailer’s own stock management systems. It is everything over which we can havesome measure in control.
Here it is especially important to provide intelligence to our business, systems such as ERP and automated warehouse management, where stock control is carried out through sensors, allow us to have greater control over the traceability of each product,the demand in each of our stores and the end-to-end route of each reference.
The information related to demand volumes for each reference, sales and synchronization with warehouses in real time, where distributors, retailers and manufacturers are connected, allows ideal business intelligence to optimize stock.
If we go a step further and use predictive artificial intelligence in our stock control solution, it will be able, based on the above data, to predict our demand with a high level of detail.
In addition to technology, the key factors are to know in depth the habits of our end customers, the frequency of purchase of each of the references and their lifetime value.
As such, CRM’s can play a key role in identifying changes in buying habits and consumer preferences. So if we analyze the data frequently, we can identify deviations and anticipate changes.
Having control over demand and taking advantage of business intelligence when making documented decisions, we are making great strides towards correct stock management.
It is important to emphasize that there are many standardized tools that allow us to optimize stock management without the need for a large investment or a high level of technological knowledge. Once again we emphasize that the important thing is the strategy and technology is only a tool that facilitates our task.
External factors are defined as everything that does not depend directly on the manufacturer or the distributor, such as trends, changes in consumer habits and many other psycho-social factors that influence the demand for one product or another.
In this case, the key is market research. Whether in-house or outsourced, you need to conduct studies, comparisons and analyses that allow you to better understand your customers’ trends, consumption habits and any changes in these.
Within the Hair Care references, we identified those more basic products, such as shampoos, conditioners, etc. that can be affected to a greater or lesser extent by seasonality, but are always in demand, and others that are 100% seasonal. The seasonality of the product is again a key factor, especially when there may be changes in consumer trends.
Considering both internal and external factors, you will be able to improve the stock management of each reference, so that you avoid the risks of not being able to meet the demand of each reference or having to assume the consequences of having overstock.
Strategies for effective stock management
Now that we know the details about the key factors to ensure an optimized management of the stock of hair products, let’s analyze those business strategies that allow us to put it into action. Following are four of the most important strategies:
1.- Implement a stock tracking and control system
As previously mentioned, acquiring software that provides a true picture of current inventories, sales and demand trends allows for better inventory tracking and control. With this systematized and well-fed information, informed decisions can be made.
The complexity of the chosen system will depend on the degree of technological maturity of each company, however, it is important to remember that what is essential is the strategy and what we are going to do with the information obtained, and less the choice of one or another technology.
2.- Make a demand forecast
Another important strategy is demand forecasting and the establishment of ordering points.
Using historical sales data and industry trends, you can estimate future demand and establish reorder points that tell you when and how much to replenish. This helps you avoid out-of-stock situations and maintain adequate inventory to meet customer needs. You may also consider implementing a just-in-time inventory (JIT) system, which allows you to receive products just when you need them, thus avoiding unnecessary stock build-up. In this case, having technological solutions becomes a must.
3.- Having a suitable distributor
A reliable distributor ensures a constant supply of products. This means that the retailer can maintain an adequate inventory of the product portfolio of the brands demanded by customers, thus avoiding stock shortages.
By having continuous access to popular products, the retailer can meet customer expectations and avoid losing sales due to unavailability.
A successful distributor should be a strategic partner, in addition to ensuring the supply of products, is up to date on the latest trends and consumer habits and can provide information on changes in them or recommend the introduction of new products on our shelves.
4.- Successful and trusted brands for the customer
Successful hair care brands tend to be in high demand, which translates into a fast turnover of their products. This avoids inventory build-up and improves stock management efficiency.
By couting on these brands, a retailer can take advantage of the popularity of the products and ensure that the items sell quickly. In addition to generating cross-selling and in this way, increasing the average purchase ticket.
And this is where Starbrands comes in, with premium brands for all hair types, developed using innovative methodologies and always under the principles of respect for the environment, clean beauty and animal welfare (cruelty free).
That’s why Starbrands is always a winning option for cosmetic & hair care retailers.
At this point, we have seen the key factors that influence the optimization of stock management, remember that technology, the strategy behind it, market research, having distributors with which you can build a good relationship of trust and ensuring that your shelves are stocked with leading brands, these are the keys to avoid extra costs in storage, and products are not shortage on the shelf.
We hope you find this information useful and remember that if you are a retailer or distributor of Hair Care products and you want us to join forces, ask us for more information about our partner program, we will be happy to go into details.