Excess Inventory: A Trillion-dollar Problem

Excess inventory: A trillion-dollar problem

Inventory is the single largest asset on any retailer’s balance sheet. It’s also one of the largest costs, with excess inventory costings U.S. retailers an estimated $500 billion a year. Worldwide, the costs of excess inventory tips $1 trillion.

Costs associated with inventory accumulate from several sources:

• The cost of warehousing space, with costs continuing to spiral as warehousing capacity in metropolitan areas exceeds 95 percent
• Associated warehousing costs such as insurance, taxes and management fees
• The impact on the balance sheet and the distortion of inventory value at quarter- and year-end
• The decline of warehoused goods, which are susceptible to damage and obsolescence
• A shift within the industry where responsibility for overstock has become diluted: in many cases it’s not one person’s problem

So why don’t retailers and brands move faster to address and resolve the challenge of excess inventory? In many cases it is concerns over brand equity, limitations relating to brand restrictions and conflicting channels – and simply not knowing where to start.

At TigerTrade we help brands and retailers to move excess inventory while protecting their brand equity and honor all brand-enforced limitations. We work with luxury and household-named brands so they can move large quantities of excess inventory, reach new distribution channels and maximize the financial return from existing stock.

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