During the last 12 months, fashion retailers heavily invested in tightening assortments and improving their inventory efficiency. While these investments are needed, all the benefits come undone if a customer cannot find their size. Worse, tightening assortments exacerbates the size stock-out problem, damages customer satisfaction, and creates significant financial pain unless size allocation is accurate. A 20% size misallocation drops margin dollars by 50% if markdown pricing is uniform across all sizes.
With growing eCommerce channels and increased online shopping behavior, omnichannel retailers are grappling with the increased complexity brought on, in part, by current events, but more so the anticipated need to combine online and in-store merchandising, especially for the “new normal”. Siloed decisions around allocation, promotions, in-season pricing, inventory transfers and fulfillment will fail to deliver the expected margin performance unless they address the interconnectedness of online and stores.