Causes of Dead Stock
1. Overestimation of Demand for Goods: Retailers might overestimate the demand for specific products, resulting in excessive ordering or manufacturing. When real demand does not meet forecasts, excess inventory can soon become dead stock.
2. Seasonal or Trend Changes: Merchandise that is seasonal or associated with specific trends may become outdated when the season or trend fades. Failure to anticipate these changes and adjust inventory levels properly might lead to dead stock.
3. Inefficient Inventory Management: Inadequate forecasting, inaccurate demand planning, or inappropriate stock rotation can all contribute to the accumulation of dead stock. Without suitable mechanisms in place, merchants may struggle to keep optimal inventory levels.
4. Supplier Issues: Delays or disruptions in the supply chain might cause excess inventory if products arrive late or in numbers that exceed demand. Poor communication with suppliers and unanticipated changes in manufacturing schedules can also contribute to dead stock.
5. Product Obsolescence: Advances in technology or shifts in consumer tastes might make certain items outdated. Retailers may wind up with dead stock if they fail to detect and respond to market or industry trends.
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