Minimising Balancing Issues in Seasonal Retail Identifying and Addressing Causes of Stock Imbalances in Seasonal Retail

Abstract

This thesis examines the causes of stock imbalances in seasonal retail, using Sports Inc. as a case company. Seasonal retail, and Sports Inc. particularly, pose unique inventory challenges. Circumstances such as long lead times, low and uncertain de- mand, as well as limited flexibility during the selling season, complicate inventory management. The study identifies which stages of the inventory process contribute to imbalance, in what way they do so, and how their negative effects can be min- imised. A mixed methods approach was used. Interviews with key stakeholders were combined with analysis of sales and distribution data. The thesis shows that the initial allocation and replenishment processes are the key contributors to stock imbalance. In the initial allocation, high minimum values lead to oversupply in small stores. The replenishment reinforces imbalances stemming from the initial allocation, due to its static reorder levels. Furthermore, the lack of adjustments for leftover stock and other changes worsens the problem. To minimise these issues, the thesis proposes several changes. This includes dynamic reorder levels and further deepening the store grade differentiation. Complementary strategies like end-of-season consolidation and store-level fulfilment of online orders offer further means to mitigate the consequences when imbalance still occurs.