There Is Still A Long Way To Go For The High Inventory Problem Of Garment Enterprises.

Inventory is a drawback of the garment industry, and inventory management is a problem that garment enterprises have to study in depth.

There are many reasons for the backlog of inventory, including subjective, self controlled and misleading reasons for the difficulty of demand forecasting due to the short period of consumer aesthetics and short fashion trend.

In the inventory problem, we have to mention the fast fashion brand H&M and the domestic brand Hai Lan's home.

High inventory problems have been bothering them. What makes them face high inventory and how to deal with them?

H&M

In order to clean up stocks and protect brand image, they would rather burn than sell at a reduced price.

H&M has been exposed to nearly 60 tons of inventory in 5 years, averaging 12 tons a year.

H&M has been on the blacklist of the clothing industry and the environmental protection industry.

In recent years, the slowdown in sales of fast fashion brands has further expanded their inventory size.

In the first half of 2018, H&M inventories reached SEK 36 billion 333 million, about $4 billion, up 13% from the same period last year, occupying 31.9% of sales.

H&M, who was besieged by all circles of speech, began to recover clothing, sell secondhand clothing and take environmental protection fabrics to restore the brand image.

The introduction of recycled clothing mode has made H&M more respectable.

But environmental recycling can help reduce pollution. The recycling rate is determined by the quality of recycled clothes. Some of them can be sold to second-hand stores, donated or upgraded to new fabrics, but bad ones will still be thrown into the dump.

The final destination of most of the clothing recovered from H&M is downgrading and garbage disposal.

In order to further reduce inventory pressure and reverse waste impression, H&M launched the salted fish platform recycling program in the Chinese market and launched a second-hand garment sales platform in Sweden.

If these measures can be carried on smoothly, we can make up for the pressure of inventory to a certain extent.

Hai Lan's home

The trouble of high storage to Hai Lan's home is not a little two points.

Hai Lan's home's earnings report in 2018 showed that the amount of goods stored in the report period was 9 billion 473 million yuan, up 11.55% from 8 billion 492 million yuan at the end of last year, and the turnover period was 286 days.

Hai Lan's home said that the increase in inventory was mainly due to the increase in the stock of OVV, Hai Lan preferred life hall, AEX, boys and girls.

In 2015 and 2016, the inventory was 9 billion 579 million yuan and 8 billion 632 million yuan respectively. In recent years, Hai Lan's home has been approaching tens of billions of dollars after 2015.

The high inventory of Hai Lan has an inseparable relationship with its distribution mode.

Franchisees do not undertake the risk of unsalable inventory, and can also return inventory to Hai Lan's home.

As a result, the inventory of Hai Lan's home began to rise.

At the same time, there are many problems caused by the development of brand matrix.

Hai Lan's family's choice of "life cheap and beautiful" route is not only in the home market but also in the risk of losing money.

The report showed that the subsidiary of Hai Lan's preferred living room was only 9 million 607 thousand and 800 yuan in the first half of 2018.

The new frequency and quantity are too slow, the price of goods is unreasonable, the style is confused, the location is not clear, the quality is general and so on, which leads to the lack of core competitiveness and the backlog of inventory.

Therefore, Hai Lan's home should deal with the inventory problem, not only to change the adverse effects brought about by the distribution mode, but also to go deep into the market, make good localization for its brand and reduce risks.

Sum up

"The most valuable part of the clothing industry is inventory."

Inventory problem is common in the industry. In the short term, it will affect the turnover of cash flow of enterprises. If it fails to solve the problem for a long time, it will even lead to the collapse of cash flow. It will also increase the cost of storage and pportation, and spend money on enterprises.

Of course, inventory problems are still difficult to eradicate at the moment.

In order to reduce inventory, enterprises should form correct ecological concepts and industrial supply chains, explore new retail and digital operations more efficiently, and improve the efficiency of clearing inventory.