Effective product selection and inventory management have long been the backbone of retail success, demanding both precision and adaptability. Today, the stakes are higher than ever. Stricter return policies driving consumer frustration, persistent stockouts costing retailers nearly $1 trillion worldwide annually, and escalating operational costs fueled by inflation and economic uncertainty have made inventory management more unpredictable and challenging than ever before.
This committee consists of venture capitalists, tech incubators and accelerators, retail strategists and academics who advise NRF on engagement strategies to strengthen connections between the venture, technology, and retail communities.
Compounding these challenges is the traditional approach to inventory. Manufacturing in bulk, storing goods in centralized warehouses and hoping demand aligns with supply is ill-suited to today’s market, where trends shift rapidly and consumers demand immediate gratification. As 2025 approaches, the retailers that will lead the pack are those leveraging technology and forward-thinking strategies to navigate these issues.
At Commerce Ventures, we see inventory inefficiencies as opportunities for growth and profitability. Overstock leads to wasteful markdowns that erode margins, while understock results in missed sales opportunities and frustrated customers — issues that ripple outward, affecting brand reputation, customer loyalty and operational efficiency.
The outdated, manual processes burdening retailers are ripe for disruption, with emerging companies pioneering solutions that go beyond traditional forecasting to offer precision, responsiveness, and customer-centric results. Let’s look at some of those solutions.
Inventory mismanagement has long plagued industries like fashion and seasonal goods, where rapidly shifting trends and consumer expectations make forecasting demand particularly challenging.
To address this, companies like Purple Dot make pre-orders a seamless part of the retail operations process to sell products before they physically exist, which fundamentally rebalances inventory risk. This shifts the burden of uncertainty, allowing retailers to align production with actual demand rather than relying on speculative forecasting.
For industries like fashion, where trends emerge and fade rapidly, this model allows retailers to gauge demand early, optimize production cycles and minimize stockouts. Additionally, by offering transparency and assurance, retailers often see higher conversion rates as customers value the opportunity to secure sought-after products. Brands like LØCI demonstrate the platform’s potential, recovering 90% of missed sales through Purple Dot’s pre-order solution.
In today’s retail landscape, companies face acute challenges in balancing costs, speed and adaptability. Rising consumer expectations clash with escalating costs for warehousing, global shipping disruptions and unpredictable demand cycles. Traditional supply chain models, reliant on bulk inventory storage and lengthy production timelines, are proving inadequate in an era where trends can shift in weeks or even days. These pressures demand innovative solutions that realign supply chains to be leaner, faster and more responsive to market fluctuations.
While Purple Dot addresses demand-side challenges, companies like Portless focus on the supply side. Portless eliminates the need for inventory storage by enabling a direct-to-consumer fulfillment model. Orders are shipped directly from the country of manufacture to the customers’ door, leveraging just-in-time production and fast global air shipping to align supply with demand. This model eliminates warehousing costs, reduces overhead and accelerates time-to-market, making it a game-changer for brands in fast-moving industries.
For consumers, this means more affordable products and access to a broader selection. For retailers, it offers a scalable, cost-efficient way to operate in an increasingly competitive landscape.
In 2025, operational efficiency is a necessity. Retailers leveraging pre-orders from Purple Dot or just-in-time fulfillment from Portless are better equipped for a fast-changing market. In addition to these technologies, companies like Sizeo optimize inventory with AI-driven size matching, boosting revenue and reducing waste, and Pensa Systems uses advanced computer vision to provide real-time shelf visibility, cutting stockouts and inefficiencies.
If you are interested in seeing these technologies in action, they will be showcased at this year's NRF Innovators Showcase during NRF 2025: Retail’s Big Show, set to kick off on Jan. 12, 2025.
Matt Nichols is a member of the NRF Innovation Advisory Committee and a general partner at Commerce Ventures.