Excess Inventory Management and the Role Testing Can Play
It’s a hard time to be a demand forecaster or inventory manager. Excess inventory piling up at retail stores across the country is creating or compounding challenges for the 2022 holiday season.
As we continue to move past the pandemic, consumer preferences have been shifting away from items they needed to make it more comfortable to be home all the time. They’re now interested in a broader range of items.
Adding to 2022 retail challenges are inflation and supply chain shortages. Both of these things have made consumer behavior even more unpredictable. They’ve also left a lot of unsold inventory on shelves, warehouses, and stock rooms.
Consequently, many brands and retailers are trying to clear out this excess inventory before 2023. To do this they are using classic markdowns and other means. Such measures are less than ideal for brands, especially as concerns about consumer confidence continue.
Some of these inventory challenges are caused by factors outside of brands’ and retailers’ control. The excess inventory issue underscores an important step in the product development process. This can contribute to an overall reduction in unsold items: product testing with customers before product launch.
Avoid Excess Inventory, Markdowns, and Unsold Items Through Product Testing
A recent CNBC article highlights some of the primary reasons retailers are struggling with excess inventory. Among them, placing larger or expedited orders of products to compensate for strong consumer demand and avoid supply chain out-of-stocks.
Slowing the influx of merchandise then became a problem. Products had been built up and weren’t selling, making it necessary to slash prices and cancel orders.
In an October 2022 survey conducted by business management software company Coupa, 90% of retailers said they had excess inventory. However, 88% said they were already experiencing out-of-stocks on key holiday items.
The excess inventory issue hitting stores this year is largely due to drastically shifting consumer preferences and retailers struggling to forecast inventory needs in an uncertain environment.
The point still stands, however, that brands can better insulate themselves against these challenges – and fare better on store shelves – by conducting pre-market concept testing and product testing with consumers.
Market conditions remain in flux after 2+ years of sustained disruption. But brands can still take advantage of concept testing and product testing. Both of these are proven and trusted paths to growth that can stand up to some uncertainties.
The Risks of Failing to Conduct Concept or Product Testing Before Launch
Understanding what your target audience is looking to buy – not just for the holiday season, but all the time – allows your brand to prevent some significant sales challenges.
Failing to put your products or product concepts in front of your audience for pre-launch testing means you’re launching into a market without direct and specific feedback. But relying on the input or feedback of friends, family, or colleagues doesn’t accurately represent your true consumers. This feedback is also often both slower and skewed.
- Sales Losses. When consumers don’t find the product or type of product they want, they’re likely to move on to a different brand. This causes your brand to miss out on a sales opportunity.
- Customer Loyalty Losses. Every brand should be aware of how quickly consumers will change brand alliances if they have a negative product experience. Excess inventory means consumers have more products to choose from and if yours doesn’t rise to the top, they may move on.
- Dead Stock. Inventory that remains unsold even after markdowns creates big problems for brands. Storing that inventory can cost big money.
Now, let’s take a look at some of the ways you can avoid these issues by integrating concept and product testing within your product development process.
Launch Market-Leading Products and Avoid Excess Inventory by Testing First
Testing product concepts, testing a new product in development, or testing an existing product to identify improvements and updates that meet changing consumer demand can all be accomplished using a product testing platform.
These platforms offer an upstream opportunity to reduce downstream challenges like inventory glut. They help your brand more successfully navigate a buying environment that continues to be uncertain.
Conducting concept and product testing before launch enables you to optimize your product development and merchandising while sticking to even the tightest timelines and insulating against inventory and supply chain challenges.
Concept and Product Testing Methods That Mitigate Sales Losses
Product testing platforms offer several capabilities that benefit product development processes:
- Connecting your brand with a community of qualified product testers you can curate to fit your target market.
- Detailed digital surveys capture pre-market consumer sentiment about your product concept or prototype as you develop the product.
- Performance zone mapping allows testers to be specific about what’s working – and not working – about your product as they use it in the way it was intended.
- Image and video uploads help your testers tell you the full story of their product experience before your product is launched, from where they use something, to what they use it with to how it is or isn’t holding up.
- Activity logs help you understand what your testers did with your product, so you can validate their feedback in the context of their experience.
5 ways these tools can help your brand better compete in today’s uncertain retail environment.
- Extend the life cycles of current products
Product testing items that are already in the market can help you identify key upgrades or improvements to fit your customers’ changing needs and preferences. You can avoid sales declines on a quality item by making slight adjustments identified by the individuals who will actually be buying and using the product.
- Infuse voice-of-the-customer feedback into your product development process
Brands commonly lack access to reliable, unbiased feedback on their products. However, MESH01 uniquely supplies brands with a community of more than 50,000 qualified testers. With this community, you can narrow down to fit your target market. These testers will use your products in the real-world scenarios they are intended for, and provide valuable feedback reflective of your end users.
- Go beyond demographics to get meaningful product experience context
There is a tester out there for every product. You will be able to leverage them by going beyond basic demographics to select product testers based on hyper-specific bio-attributes. For example, type and frequency of activity, and activity level. As well as details about buying habits like preferred stores, brands, and purchase preferences. With such specific identifiers, you can be sure your product is in the right hands for testing generable actionable insights and feedback.
- Solidify your concepts and product prototypes
After identifying your ideal community of testers, you can send concept surveys to gauge the viability of your product concept. Then you can give them your product prototypes for testing in real-world scenarios the way your product was designed to be used. Feedback is fast, reliable, and provided by individuals who represent your actual customers.
- Gain a competitive advantage
In a buying environment that is anything but predictable, product testing before launch can give your brand a significant advantage. You’ll be launching products you have already validated with your target market. So, you’re not just delivering what your actual customers want, but you’re elevating their experience with your product – and brand – as well.
Don’t Hope for Market Success – Launch Products With Confidence
Excess inventory and unpredictable consumer shopping habits are disrupting retail. But if you test your concepts and products with qualified testers in your target audience, you can mitigate the risks of launching poorly performing products.
Making assumptions about consumer preferences, or sacrificing concept or product testing altogether – increases the chances your product will become excess inventory that is unsold or must be subject to major mark-downs.
Concept and product testing is a proven way to insulate your brand against failure in the market. Launching a product that doesn’t sell is far more costly and time-consuming than testing it with target customers before launch.