Your Inventory is Bleeding Cash. Here’s How to Stop It.
Retailers unknowingly trap millions of dollars in excess inventory. It’s not just a balance sheet issue—it’s actively draining profits, slowing growth, and limiting your ability to invest in better-margin opportunities.
What if you could free up $1M+ in working capital, just by optimizing Weeks of Supply?
The Financial Impact of Reducing WOS
Reducing WOS isn’t just about efficiency, it’s about unlocking cash flow that can be reinvested to drive profitability.
For every $10M in annual revenue, reducing WOS by just 1 week frees up $58K-$231K in working capital.
Initiatives like RFID technologies, customer discovery and analytics platforms, new stores, supply chain digitization and automation, or sustainable practices suddenly become financially possible.
These types of investments are increasingly becoming a competitive necessity, and they’re all possible when you stop overbuying and start optimizing.
Here’s a breakdown of how much capital is freed up per week of WOS reduction:
What This Means:
Even reducing WOS by a single week can unlock hundreds of thousands—or even millions—in free cash flow that can be reinvested into high-margin growth.
Strategic Shift: Focus on Profitability, Not Just Revenue
Without a centralized, real-time approach to planning, millions of dollars will continue to be tied up in surplus inventory and brands will face two major risks:
Too much stock locks up working capital, increases storage costs, and leads to margin-eroding markdowns.
The average retailer is overbought by
~20-30% on roughly 40-50% of their inventory.
According to McKinsey, markdowns from overbuying reduce gross margins by 4-10% annually.
Too much stock locks up working capital, increases storage costs, and leads to margin-eroding markdowns.
Retailers are underbought by
~15-20% on 20-30% of their key items or high-velocity SKUs.
IHL Group estimates that stockouts cost global retailers over $1T annually in missed revenue.
Carrying 10-20 weeks of supply when only 8-12 weeks are needed goes beyond the balance sheet, it’s a direct hit to profitability.
From Revenue Focus to Efficiency Mindset
Every extra week of inventory inflates holding costs, increases markdown exposure, and slows inventory turnover, driving down Gross Margin Return on Investment (GMROI).
Rather than focusing solely on revenue, brands must prioritize inventory efficiency. A retailer with a GMROI of 2.5, meaning they generate $2.50 in gross margin for every $1 spent on inventory, can unlock significant cash flow by reducing excess WOS.
By optimizing inventory planning, brands can:
Instead of tying up cash in slow-moving inventory, brands that optimize WOS can reinvest in:
Optimizing WOS isn’t just about inventory efficiency, it’s a direct path to unlocking capital, increasing GMROI, and driving long-term profitability.
Why Retail Leaders Must Prioritize Profitability Over Growth
Optimizing WOS isn’t just about inventory efficiency, it’s a direct path to unlocking capital, increasing GMROI, and driving long-term profitability.
Unlocking Capital Through Smarter Inventory Planning
A centralized inventory planning solution helps brands optimize WOS and turn inventory from a liability into an asset. And that’s where Toolio comes in. We help unify:
Align inventory with sales forecasts
Open-to-buy management, multiplan reconciliation, scenario modeling & snapshotting, and forecast & actual reporting
Buy the right SKUs in the right quantities
Hindsighting & rationalization, item demand planning, line building, and automated PO planning
Balance stock across stores, warehouses, and channels
Forward looking SKUs, automated allocations, advanced rulesets, and pre-allocations
Here’s what that looks like:
Sources: Enhanced Retail Solutions, NetStock, Lark, Uphance
Instead of relying on gut instinct or disconnected spreadsheets, Toolio enables brands to:
The result? Lower WOS, higher GMROI, and millions unlocked in working capital.
Case Study
Challenge: Too Many SKUs, Too Much Inventory
AKA Brands, a fast-growing fashion portfolio, struggled with fragmented inventory planning across Excel, Inventory Planner, and Airtable. This lack of transparency led to overbuying, slow turnover, and inefficient SKU management.
Reduced SKU count by
50-75%
while maintaining sales
Cut WOS by
5-10 weeks
across multiple categories
Unlocked
$5M
in cost savings & efficiency gains
The Shift: Data-Driven Inventory Decisions for Profitability
AKA Brands replaced guesswork with data-backed buying decisions, aligning inventory levels with real demand. The result? Higher profitability and a stronger bottom line.
Stacey Schriefer
Vice President Inventory Planning
“Toolio was instrumental in showing our merchants that they could have 50-75% less SKU count and do the same amount of sales. We expect $5M in cost savings and efficiency gains.”
See Toolio In Action
The best way to understand what Toolio could do for you is to see for yourself. Get started with our team today!
