India stands as the second largest footwear manufacturer globally, contributing approximately 13% of the world’s footwear production. Given its vast population, a remarkable 90% of this manufactured footwear caters to the domestic demand itself, highlighting the immense scale and potential of the Indian market. Traditionally, India has been home to iconic brands like Bata and Liberty, which have consistently offered a wide variety of footwear to fulfill the diverse needs and preferences of Indian consumers. As formidable global brands such as Puma, Nike, adidas, Asics, and others strategically establish and expand their foothold in India, a vibrant ecosystem has emerged where many Indian brands are also boldly launching innovative designs and strengthening their market presence, creating a dynamic and competitive landscape.
In this rapidly evolving market, a clear and precise direction for planning the upcoming season or year is not merely beneficial but absolutely essential. Footwear production is inherently a long-drawn process, characterized by significant lead times and heavy capital investment. This necessitates meticulous planning from concept to retail. Beyond production, the manufactured inventory needs to be distributed efficiently and replenished effectively across diverse sales channels to meticulously avoid the dual pitfalls of debilitating overstocking, which ties up capital and incurs holding costs, and frustrating understocking, which leads to lost sales and dissatisfied customers. Finally, brands must price their products optimally and discount accurately, using sophisticated strategies to keep customers consistently coming back for more and, crucially, to ensure a healthy and consistent cash flow. This entire lifecycle, from design to sale, heavily relies on precise inventory allocation and strategic merchandise allocation.
The Cornerstone: Precision in Planning for Footwear
Effective planning serves as the unwavering directional compass for the entire year or a specific season. To plan successfully for footwear, brands must delve deep into understanding precisely what attributes or product elements are resonating most strongly in the market. This critical insight empowers the design team to adapt and address prevailing trends with agility and relevance. Increff Merchandising Software drills even deeper, meticulously analyzing up to 70 attributes. This granular level of detail is vital for strategic inventory allocation.
These meticulously identified attributes will form the robust backbone of your product masters, underpinning every decision related to assortment and merchandise allocation.
What should be in your product masters?
A significant challenge for many new and even some established brands is the confusion surrounding which specific product features should form the core of their attribute hierarchy. When undertaking the crucial planning phase, it is paramount to first deeply understand what your brand is fundamentally known for, its core identity, and then construct an article master accordingly. This foundational understanding directly impacts subsequent decisions regarding inventory allocation.
For instance, if your brand specializes in high-performance sports shoes, the type of your outsoles, the innovative technology in your midsoles, and the material composition of your insoles can be the primary distinguishing components that drive consumer choice. In contrast, if you are a fashion footwear brand, your analytical focus might shift to factors like specific heel height variations, intricate upper styles, unique embellishments, or the latest trending materials. While conducting your core planning, beyond the essential main category and subcategory classifications, it is generally ideal to stick to 2 to 3 core attributes for deep analysis. When planning based on historical sales data, attempting to delve into an excessive number of attributes in extreme granularity can often lead to analytical paralysis and unnecessary complexity, creating more headaches than solutions for merchandise allocation.
Planning Your Size Set: The Intricacies of Footwear Inventory Allocation
Footwear, much like innerwear, represents a product category where sizes cannot be easily or safely tinkered with. The implications of ill-fitting footwear extend far beyond mere discomfort; uncomfortable shoes can lead to various physical ailments, which is unequivocally the last thing you want your valued customers to be discussing or experiencing. This makes accurate inventory allocation by size incredibly important.
A meticulous analysis of past sales data provides invaluable insights into which pivotal sizes consistently perform well and, therefore, can be produced in larger, more efficient quantities. While most footwear brands prudently prefer not to eliminate any sizes entirely, aiming to keep a comprehensive range of options open to their clients, advanced analytics become indispensable. These analytics will precisely determine the optimal ratios at which each size needs to be produced and subsequently stocked. These precisely calculated ratios can then be accurately extrapolated to inform the overall buy plan, guiding strategic merchandise allocation across various retail points. This data-driven approach to size-set planning is a cornerstone of effective inventory allocation in footwear.
The Digital Frontier: Maximizing Online Footwear Sales with Smart Inventory Allocation
The online shoe market is a relentlessly growing phenomenon, presenting both immense opportunities and unique challenges. Globally, with an impressive Compound Annual Growth Rate (CAGR) of 7.25%, it is confidently predicted to surge up to US$ 543.90 billion by 2030. This digital expansion profoundly benefits brands by enabling them to reach customers in previously inaccessible tier 2 and tier 3 cities, and critically, to experiment with new product lines and market fits without the traditional overhead of physical stores. Analyzing the conversion rate based on product views and the average ticket value helps automate and optimize digital marketing efforts, and crucially, guides precise inventory allocation for online channels.
However, a significant and pervasive problem for online commerce, especially in footwear, is the unusually high return rates. This issue directly impacts profitability and requires a proactive approach to merchandise allocation. Meticulously tracking the granular reasons for returns and taking decisive action on top-returned styles can significantly help bring this rate down. Ideally, the return rate should be maintained within the 5-10% range for online sales, whereas for offline physical stores, the target is a much lower 1-3%. Poor inventory allocation can exacerbate these return rates if customers frequently receive the wrong size or an unsuitable product.
Most footwear brands face return issues predominantly due to size mismatch or perceived material discomfort. To effectively combat prevalent size issues, strategically producing half sizes, even in minimal quantities, will offer greater size flexibility and choice to customers, potentially reducing returns and improving customer satisfaction, which directly impacts future merchandise allocation decisions. Material quality can be continuously upgraded in close coalition with your manufacturer, based on feedback and return data. If your brand boasts an in-house production facility, empowering your design team to conduct material experiments based on customer feedback can lead to innovative solutions that reduce discomfort-related returns. This feedback loop is essential for refining inventory allocation and improving product fit.
The Art and Science of Inventory Allocation and Merchandise Allocation
Once the production wheels are in motion and the footwear is ready, the next critical phase is inventory allocation – deciding which specific products go to which stores or distribution centers, and in what quantities. This initial inventory allocation is foundational to retail success. It’s not a static process; it’s dynamic, continuously refined by feedback from sales data. Effective merchandise allocation ensures that the right product is available at the right place at the right time, minimizing lost sales opportunities due to stockouts or margin erosion due to overstock.
The complexity of inventory allocation in footwear is amplified by the sheer number of SKUs (style, color, size combinations) and the significant capital tied up in each pair. A robust merchandise allocation strategy takes into account store demographics, local fashion trends, sales history for similar products, and even weather patterns. For example, a store in a colder region might receive a higher inventory allocation of boots, while a coastal store would receive more sandals. This regional intelligence is vital for optimizing merchandise allocation.
Beyond initial distribution, continuous inventory allocation involves actively managing stock levels. This includes:
- Replenishment Allocation: As products sell, the system needs to determine how to replenish stock efficiently. This often involves automated rules based on sales velocity, lead times, and safety stock levels. Accurate merchandise allocation for replenishment prevents empty shelves and maintains sales momentum.
- Cross-Channel Allocation: With the rise of omnichannel retail, inventory allocation must seamlessly integrate online and offline channels. A single view of inventory across all touchpoints allows for more strategic fulfillment, including ship-from-store or buy-online-pickup-in-store (BOPIS) options, optimizing overall inventory allocation efficiency.
- Promotional Allocation: During sale events or specific promotions, merchandise allocation needs to be adjusted to support anticipated spikes in demand. This often means moving stock from lower-performing stores to higher-performing ones or centralizing inventory for online promotions.
The Role of Increff Merchandising Software in Optimizing Inventory Allocation
Modern retail demands modern solutions. Increff Merchandising Software, particularly its Enterprise version, is designed to bring unparalleled precision to planning, inventory allocation, and replenishment processes. By analyzing up to 70 attributes per article, it provides a depth of insight that traditional methods simply cannot match. This granular data enables more intelligent merchandise allocation decisions, moving beyond simple historical averages.
Here’s how Increff revolutionizes inventory allocation and merchandise allocation:
- Demand Forecasting for Initial Allocation: Increff’s predictive analytics capabilities leverage historical data, market trends, and even external factors to generate highly accurate demand forecasts. These forecasts directly inform the initial inventory allocation plan, ensuring the right quantity of each SKU is directed to the most appropriate store or warehouse. This reduces the risk of overstocking or understocking from the outset.
- Optimized Store-Level Allocation: The software’s ability to analyze store-specific attributes (e.g., store size, customer demographics, past performance) allows for highly customized merchandise allocation. Instead of a generic distribution, Increff tailors the inventory allocation to maximize sell-through for each individual store, respecting the unique needs of different retail environments.
- Dynamic Replenishment driven by Real-time Sales: As sales occur, Increff continuously monitors stock levels and sales velocity. This real-time data feeds into its replenishment engine, automatically suggesting optimal reorder quantities and the best locations for new stock. This dynamic inventory allocation ensures shelves are always stocked with fast-moving items, while slow movers are identified for markdown.
- Size Curve Optimization for Footwear-Specific Allocation: Given the critical importance of size runs in footwear, Increff’s analytics precisely determine the ideal size curve for each style based on regional demand and historical performance. This informs a more accurate merchandise allocation by size, minimizing “broken” size sets that lead to lost sales.
- Markdown Integration with Allocation: Increff’s markdown optimization module works in tandem with its inventory allocation capabilities. If a style is identified as slow-moving after initial inventory allocation, the system can recommend strategic markdowns or even suggest transferring inventory to a store where it might perform better, ensuring every piece of footwear has the best chance to sell.
- Reduced Manual Intervention: By automating much of the planning and inventory allocation process, Increff reduces reliance on manual spreadsheets and human intuition, which are prone to error. This frees up planners to focus on more strategic initiatives, leading to more efficient merchandise allocation and overall operations.
Conclusion
The Indian footwear industry has undergone a remarkable transformation, evolving from a sophisticated low-cost supplier to a vibrant, world-class market supplier. This exciting evolution is underpinned by the widespread adoption of modern, state-of-the-art retail technologies, meticulously implemented to suit exact international requirements and standards. In successful collaboration with international online retailers like Amazon and Walmart, multiple private footwear brands have boldly joined the ranks of cross-border e-commerce, making significant strides on the path toward comprehensive digital transformation. As the footwear market is confidently expected to continue its exponential growth trajectory, the imperative for accurate demand analysis, rigorous cost of production checks, and especially precise inventory allocation becomes paramount to propel it forward. The strategic implementation of robust merchandise allocation solutions, like Increff Merchandising Software, is no longer a competitive advantage but a fundamental requirement for maximizing sales, enhancing profitability, and ensuring sustainable success in this dynamic industry. Without meticulous inventory allocation and an optimized merchandise allocation strategy, even the best products can fail to reach their full potential.
Excited? Call us now!
