Off-Price Retail Landscape Explained

INTURN is the only enterprise inventory optimization solution empowering brands to efficiently sell slow-moving and excess inventory to retailers and recover cash faster. Learn more about our solution and see how INTURN can help optimize your off-price business.
2. How does off-price retail work, and where does excess inventory come from?
Off-price exists because of excess inventory in the market, which can be caused by a number of reasons:
Economic Instability
Unpredictable Demand for Product
Changes in Consumer Spending Habits
Purchasing Setbacks, Credit Issues
Unexpected Weather Fluctuations
Excess inventory can be either a potential loss of revenue or a huge opportunity to unlock cash flow, depending on a brand’s strategy.
Brands are often stuck selling excess inventory below MSRP. As time goes on, both consumer demand and the value of the products decrease, making it even harder for brands to offload their excess inventory. Holding costs like warehousing, insurance and taxes also cut into revenue. What’s more, slow monetization of inventory affects a business’s freedom to take out loans at the best rates, further inhibiting their financial situation.
This is where off-price retailers come in. They operate by buying products from thousands of different designers, capitalizing on the unpredictable nature of consumer demand and errors made in the production process by outlets looking to ensure that their stores are always stocked.
However, this is hugely beneficial for manufacturers looking to shift excess units in order to recover some of the money that would have otherwise been tied up. Off-price retailing is therefore made possible and acts as a solution for manufacturers.

7. How can brands optimize their off-price business?
It can be difficult to know where to start when optimizing for off-price. You don’t simply want to sell your products to buyers who will purchase the most; you also want to optimize the value of your inventory to help hit your margins. Here are some best practices in doing so:
1
Updating your backend systems
While it can be easy to let this drop down the priority list, ensuring that you have a solid internal infrastructure is integral to your success. Updating legacy systems, such as your inventory management, image management, markdown optimization and invoicing/PO, is key. And it’s important that you replace any outdated processes as well as systems to ensure that you’re bringing improved visibility and structure to your inventory tracking and overall off-price business performance.
Action
Aggregate and provide all available product information to buyers in a clear, comprehensive manner in order to increase buyer confidence and purchasing prices and enhance existing relationships.
2
Determining what inventory needs to be marked down and sold
Products can reach a range of locations during their selling lifecycle as a result of unexpected returns, cancelled orders and changes in shipping processes. Poor reporting systems only worsen the situation, leading to further misjudgements over inventory levels.
Having a clear and up-to-date reporting platform is therefore essential. Take full stock of products across all wholesale, retail and e-commerce stores and ensure that you collate this information to help you locate the places where your cash is tied up in.
Action
Get all of your reporting up-to-date and aggregated for each channel of purchase to give you a clear real-time view of the inventory situation and where your cash is tied up.
3
Optimizing your buyer network
Timing is everything – a huge element of your success is finding the right buyer for your inventory in the right market at the right time. The ideal buyer isn’t always the one with the highest market demand for your product, with there being a number of other factors to consider like ease of communication and whether they have a customer base that fits with your brand.
Review your current buyers and reach out to new ones in domestic and global markets. Doing so will help you work towards your ultimate goal of selling inventory with the highest profit margin.
Action
Vet your current buyers, and reach out to new buyers in both domestic and global markets in order to sell your inventory with the highest profit margin.
4
Providing buyers with detailed product information
No one wants to blindly commit to a purchase. Detail is everything, and buyers who are purchasing items based only on a text description are likely paying a much lower price for those products because they’re not entirely sure what it is they’re buying.
Save buyers the trouble of Googling style numbers in search of more information by ensuring that your product listings include images, product descriptions, measurements, fabric content, material codes, product origin, color codes and country of origin. There’s no such thing as too much information, and providing such detail will increase buyer confidence and in turn boost your profit margin.
The proof is in the numbers – global apparel brands have seen an increase in recovery value of +50% on product listings with rich content. Multinational off-price retailers also project that they can save 100 hours per buyer per month with simpler access to inventory offers rich with product data.
Action
Aggregate and provide all available product information to buyers in a clear, comprehensive manner in order to increase buyer confidence and purchasing prices and enhance existing relationships.
5
Understanding your market demand
Offers that are curated for specific buyers in specific markets are much more likely to see products sell at a higher price as this means that buyers will also be able to sell products to their end customers at a greater price.
Determine the location and market where there is the highest demand for and lowest supply of your merchandise to allow you to sell your items for more. Through curating product listings for particular markets, multinational brands have reduced the time that off-price retailers spend on buying by 80%. Off-price retailers have bought 25% more units from these curated product listings, so it’s well worth doing your research to help buyers out!
Action
Find the location and market where there is the highest demand for and lowest supply of your merchandise in order to sell your products at the highest price.
6
Supporting a robust internal communications system
It might sound obvious, but strong internal communication is the key to your off-price success. Transparency and internal oversight allows for better management, informed decision-making and more efficient processes.
Employees spend 30% of their workday looking for existing company information. Optimize your work efforts by supporting a strong internal communication system. Collaborating saves time and money, streamlining processes and helping you turn over more inventory.
Want to learn more? We have more off-price resources for you here.
Action
Improve teamwork and internal insight in order to create a streamlined and efficient process for turning over your inventory.