Posts Tagged 'Product life cycle'

Inventory management? It depends on the inventory

I commented recently (on RetailWire) about the skill set needed to manage different kinds of inventory. There is no hard and fast rule, because it depends on whether the store in question is in the “staple” or “fashion” business:

Any store needs to hit the right balance between staple, fashion and fad merchandise. (The difference being that “fads” have a much shorter life span unless they evolve into fashion trends with more staying power.) The question of “the right balance” really depends on the nature of the retailer’s brand image and target customer. Clearly Forever 21 needs to play in a completely different world than (say) Chicos — which is not devoid of fashion but is more dependent on staple inventory.

It’s a key question because the product life cycle of each type of merchandise — and the inventory management needed to get into and out of trends profitably — may be totally different for fads, fashion and “basics.” Retailers don’t want to be stuck with too much of a fast-moving fad; on the other hand, they don’t want to erode their in-stock levels on basics by fixating on chasing trends.

Crumbs closes its stores, but may survive

There was plenty of news last week about the cupcake chain Crumbs…first the announcement of its closing, then the news that new investors will step in to save the brand. The discussion at RetailWire centered around whether the cupcake “fad” is sustainable, but I feel that’s missing the point. It’s really an issue of how Crumbs ran its business, not whether cupcakes are a passing fancy:

I’m not sure that cupcakes themselves are the problem — calling them a “fad” is like calling donuts a “fad” just because Krispy Kreme had the same kinds of problems. Yes, there are too many places to buy cupcakes, and every city has its own local examples of failures. But four years into the “Cupcake Wars” series on Food Network might be a sign that the category is postpeak — not explosive, but still sizeable and profitable. (Who doesn’t love cupcakes, after all?)

It sounds like the lessons of Crumbs — whether it survives or not — are more particular to its business model. Did it expand too fast? Did it offer enough diversity on its menu, like Magnolia? Did it have the financing and infrastructure in place to support its growth plans? These are all cautionary questions that any growth-oriented retailer needs to ask, no matter whether it is selling cupcakes, jeans or candles.