Today, as always, the major concern for retailers is sales. Don’t be distracted by all of the factors making trading conditions tough – retailers need to be bold in ignoring the noise and remaining laser focused on their objectives: sell, and sell as profitably as possible.

Whether it’s the luxury market or not, it all starts with the same question: how many items can you sell in a given store and across all of your stores? And from this, how many pieces have to be designed, produced, and then distributed to the right place in order to maximize that sell through? 

Produce too much and don't sell it, you lose money. It’s simple, but don’t confuse simple with easy. The brands doing this best are relentless and fearless when it comes to finding innovative ways to produce less, sell more and identify profitability potential – wherever it can be found. 

Improving profitability doesn’t happen on its own, so retail leaders have to quickly get to grips with the profitability levers they can pull in their business.

Balancing stock levels with sales potential

All retailers are looking for a product that will sell, and sell through. They can’t afford to have excess stock hanging around at the end of the season. Heavy discounting does little for margins and even less for luxury brand equity.

But how can brands predict next season’s bestsellers with the confidence they need to go all-in? For decades intuition has been the (often inaccurate) go-to tactic, but even when it works out retailers are still faced with the challenge of moving quickly enough to supply the demand when it makes itself known.   

So, the choice that bold brands are making is to have the courage of their convictions when it comes to balancing stock levels with sales potential. Yet, that doesn’t necessarily mean taking a gamble with future performance. Their bold move is investing in smart inventory management, harnessing AI to level up their high-flying product predictions, sales forecasting, as well as reordering and rebalancing. 

Who would want to absorb an eight-week delay between identifying a bestseller and actually being able to meet demand for it? 

If profitability is the key focus, then those eight weeks at low stock or stock out make for excruciating reading – particularly when that same stock arrives only in time to be discounted and sold through at the expense of margin that existed a few weeks earlier. 

In fashion, often the iron is hot only for a short amount of time – bold retailers need to be ready to strike at all times.

Next location, next channel, next platform

And, what if you have the opposite problem? Products overstocked and undersold – cue the countdown to discounting. 

I’ve touched on the downside of discounting above, yet it’s the first place that brands turn to when overstocked. Sure, it’s one of the easier tactics to deploy, but there’s a better way if retailers are willing to roll up their sleeves.

There are loads of reasons why products don’t sell – it’s not always simply a bad call on the product itself. Bold retailers move quickly to trial slow-moving stock through different channels and locations – an in-store flop can turn into an online hit overnight and the difference in buying behaviours between even similar store locations can make the difference between profit and loss on individual SKUs.

And that’s before newer routes such as social media selling have even been considered.

Here’s another place where the bold implementation of super innovative tech is moving the needle on profitability. By equipping in-store sales teams with devices to contact customers who have purchased the same type of product, or the same style, in the past retailers are flipping their sales processes by going to the customer rather than waiting for the customer to come to them.

It's a variation on the personal shopper experience but driven by supply volumes and retailer profitability potential.

Boldness: the path to profitability

Where profitability is under pressure, boldness isn’t an outlying characteristic of a few innovative brands, it’s the core principle of those succeeding. 

The retail winners won’t be the ones who played it safe – it will be the ones who pushed forward and leaned in to challenge. Whether it’s precision forecasting, dynamic inventory shifts, or proactive customer outreach, the most successful brands are those refusing to sit back and accept eroding margins and declining profits.

This is the 8th post in our latest Profit or Perish series where we uncover the key retail trends that’ll dominate 2025 according to the hottest names in retail. Watch this space for more predictions coming soon.