Shift to At-Once Orders Rattles Soft Goods Industry
By Tom Ryan
While the shift toward
at-once programs, or just-in-time inventory, has been going on for years
in the apparel and footwear industry, it is clearly accelerating due to
the tightened credit market and consumer slowdown. But vendors remain concerned
about how the counter trend toward fewer pre-season buys is reshaping futures
For retailers, it’s become
even more necessary to keep inventories to a minimum to preserve cash flow
and meet lender requirements in today’s troubled economic climate. Increasingly,
many retailers are foregoing the often deep discounts offered in pre-season
bookings to avoid being stuck with huge markdown risks at the end of the
season, retailers told Sporting Goods Business.
But stores have been
pushing for better at-once programs for years because buying closer to
the season and even in-season leads to more accurate buys around consumer
demand instead of waiting up to nine months for futures orders. Working
on leaner inventories also enables retailers to chase hot product instead
of waiting for last-seasons’ slow-sellers to clear of the sales rack. Finally,
frequent in-season deliveries help stores manage their cash better.
But many retailers claim
vendors have been reluctant to share the inventory risks and build up adequate
in-season inventories to meet their fill-in needs.
"The retailers have
to have more support from the manufacturers on having replenishable merchandise
rather than up front orders where the retailer takes all the risk and financing
responsibility," stated a head merchant at a major regional full-line
sporting goods chain who declined to be named.
Said an assistant GM
at an independent sporting goods store, "Many product categories can
get into an over-inventory situation using futures orders. The more we
can use fill-ins and at-once orders the better control we can have."
While vendors clearly
don’t want the inventory risk, they also note that futures programs enable
the discounts that bring the coveted high-margin buys to retailers. Many
also believe the shift away from futures programs will ultimately hurt
product development and bringing new ideas to market.
"The industry will
see less demand, which will mean less of a buy with our factories,"
said Brian Good, senior manager of credit and A/R at Puma. "When or
if the product becomes in demand and the customers want to do at-once business,
they will be unable to fill in due to the decreased buy which will affect
all…Only those companies that have lines that repeat every year will be
in stock. Brands that have new styles year after year will become very hard
to get a hold of."
Brad Gruber, national
sales manager at Grendha Shoes Corp, said that with vendors being forced
to forecast narrow and deep, there will be little differentiation between
retailers and margins will consequently suffer.
Said Eric Tung, president
of FERA Intl. Corp., "There are limits to how fast product can be
packed, shipped, delivered, and out on the floor. So there is greater risk
for the retailer of lost sales."
What are the merits of at-once versus futures programs in the soft goods
industries? What are the risks of increasingly relying on quick-response
programs to meet inventory needs?
- The SGB Question: "How do you
see the trends toward more fill-in and at-once orders and pushing back
futures affecting the landscape of the sporting goods industry in 2009?" – Sports
One Source (free reg. required)