Thompson’s


Challenge

Apparel is a large chain of luxury department stores. It is crucial for such retailers to maintain an optimal level of inventory. On the one hand, Apparel needs to ensure that in-demand products are available in their stores at all times. On the other hand, it needs to ensure it liquidates its stock promptly. In an attempt to turning its inventory faster, Apparel has implemented several initiatives. One of them is holding frequent warehouse sales to liquidate stock.

Background

Outstanding inventory Management is crucial for department stores to maintain operating costs low and keep customers satisfied. Apparel has been leveraging warehouse sales successfully as one measurement to do so. A recent warehouse sale took place for 5 days in a fairground location close to a large city. The event offered customers savings of up to 80% on their apparel, accessories and footwear.

Details

Apparel has created a real shopping event with its Warehouse Sales through offering large savings in an unconventional retail atmosphere for only a limited period of time. The event marked Apparel`s 10th Warehouse Sale in that area since 2015 indicating its huge success.

Besides the general savings of up to 10%, there were audio announcements in the hall that informed shoppers of further special deals ongoing for only the following hour. As such, the Sale really established itself as an event where customers dug through the large assortment and hunted for their personal great deals. Customers attending the event felt like “insiders” that were able to save money while still purchasing popular high-end brands.

Win-Win

The recent Warehouse Sale also marked the 10th partnership of Apparel and a regional online community named Update. Update is an online platform that keeps their community up to-date about regional warehouse and retail sales. It sponsored Apparel`s Warehouse Sale and incentivized their members with an additional 10% off the merchandising available at the sale. Furthermore, it held a contest on Facebook where members that liked and tagged two other members under a post about the sale had the chance to win a gift card. As such, partnering with such a popular department store helped Update to strengthen and ultimately, expand their online community. Apparel benefitted as it used Update as the only medium of communication.

Pop-Up Details

Location: Markham, Toronto

Student Questions

The objective of this pop-up shop example is primarily to liquidate stock and increase inventory turn-over.

What other objectives can you think of?

  • Communicational: raises brand awareness
  • Experiential: Retail experience differs from the high-class experience in their stores; almost like a treasure hunt
  • Transactional: Such event expands their target group. Allows customers that may not be able to afford Apparel`s brands in general to afford them while also attracting loyal customers to shop for deals
  • Differentiated experience: Location of the Sale was fairly far away from their regular store and doesn’t cannibalize the regular store traffic
  • Allows Apparel to always have seasonal merchandise in-store while offering off-season products through these warehouse sales

Aside from such pop-up shop experience, what other ways for apparel retailers can you think of to increase inventory turnover? 

  • Leveraging online sales to expand the target group
  • Procuring products that is unavailable in one store from the inventory of another store to liquidate brick-and-mortar stocks effectively
  • Presence in off-price segment with permanent Rack stores as opposed to just the pop-up warehouse sales

Key Learning Objectives

  • Inventory Management as an objective for pop-up shops
  • Expanding the target group through such temporary event