The Hidden Complexity of Stock Allocation in Physical Retail
Getting stock right in flagship stores and beyond.
When a DTC brand opens its first store, it’s often treated as a marketing milestone, a physical extension of the brand world. What’s rarely talked about is how quickly that flagship turns into a stock management headache.
Because while ecommerce has the luxury of a single digital warehouse, retail introduces one brutal truth: the moment stock leaves the DC, it becomes harder to control.
The illusion of simplicity
On paper, store allocation looks straightforward. You work out what you expect to sell, multiply it by weeks of cover, and ship it out. In reality, it’s a puzzle of unknowns; location, assortment, sizing, and local demand patterns that you can’t fully model until you’ve lived through a few trading cycles.
New store openings often rely on instinct and experience. Merch planners lean on sales budgets rather than actual demand data, sending a “balanced” mix of product just to create a decent in-store offer. That’s fine for launch day, until certain sizes vanish, jackets linger on rails, and stock that could have sold online is now locked in a boutique 300 miles away.
Why ERPs fall short
Most ERPs are designed to tell you what you have, not what to do with it.
They can trigger replenishment based on basic thresholds; “you sold one, send one back”, but they can’t predict acceleration in demand or recognise when a product has hit viral status. That’s why so many merch teams are still running replans in Excel, calculating rate of sale, adjusting cover weeks, and re-uploading orders manually.
It’s a manual process masquerading as automation.
Some brands are starting to plug in tools or AI-driven overlays to handle demand-based replenishment, but most still sit somewhere between a spreadsheet and an expensive ERP licence.
The human side of allocation
Even with tools, allocation is rarely objective. Store managers always want more of what’s selling, even when the data says otherwise. Merch planners, meanwhile, are trying to balance assortment breadth, store space, and warehouse stock levels while senior leadership pushes for higher sell-through.
Every decision is a trade-off: depth vs. diversity, local hero products vs. global consistency, and margin vs. markdown risk.
When expansion exposes the cracks
As a brand expands beyond one or two stores, the cracks in allocation widen.
Replenishment cadence: Some stores get daily picks, others twice a week, and stock can sit in the wrong location simply because it isn’t their pick day.
Cross-border movement: Post-Brexit, moving stock between stores can trigger intercompany costs and customs delays, making reallocation an accounting problem as much as a logistics one.
End-of-season: The cost of returning sale stock can outweigh its value, so stores end up feeding local outlets instead of centralising back to eCommerce.
At scale, it’s chaos disguised as process.
Omnichannel as the release valve
The real solution lies in making stock fluid again.
Being able to ship from stores, fulfil online orders locally, and redistribute through omnichannel logic allows stock to move at the pace of demand, not delivery schedules.
It turns each store into a micro-warehouse, every rail into available inventory. And it changes the role of the store from static display to dynamic node in the supply chain.
But that shift requires more than tech. It demands cultural change: operations, merchandising, and finance working off the same set of priorities rather than fighting over whose budget the sale sits in.
The takeaway
Opening stores feels like a natural evolution for growing brands. But retail isn’t just a sales channel, it’s a new layer of operational complexity.
Every product you ship into a store adds cost, friction, and risk, but also an opportunity to build resilience and data sophistication. The brands that handle allocation best aren’t those with the biggest budgets or the flashiest tools. They’re the ones who understand that stock decisions are just as strategic as store design.
Because the moment you go physical, your stock stops being numbers in a system. It becomes geography, weather, timing, and people.