Q: What are the pros and cons of front loading product? And specifically, how should a company address the cons?
Steve Pruitt: We run into this situation in the market often. Stores with high amounts of European merchandise often have little choice since some vendors only ship once a season, whereas non-European stores have more control of deliveries.
It also varies by the product gender of the store. Men’s stores tend to front load because their vendors don’t do as many deliveries. In women’s stores, vendors have many more deliveries, making front loading not as necessary.
Many stores tell me that when they buy everything upfront the customer that comes in only once a season gets to see the complete collection and buys more. I believe this is flawed logic. The mantra today is that the fashion customer never stops buying.
In summary, here are the cons associated with front loading:
- Cash Flow—If you land it early you have to pay for it early. As such, you need to have more capital invested in inventory.
- Aging of Inventory—When the inventory ages the makeup of the inventory gets more picked over and broken. This leads to a loss of size balance and an increase in markdowns.
- Fewer Customer Contacts—I see this as the biggest issue. As you get deeper into the season you lose the ability to call your clients for second or third visits because you have nothing new to show them. This, of course, leads to lost sales.
So, unless you have a store with a high mix of European vendors, I wouldn’t recommend this tactic.
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