01 March 2019

How stock management makes Alpkit a growing success

They know their customers inside-out, they’re proud of their product quality and their speed-to-market is remarkable, but Alpkit’s success is also founded on superlative stock management. David Hanney explains why it’s vital to get working capital really working.

Outdoor gear specialist Alpkit was founded by four climbing friends back in 2004. They had all worked in retail and then for an outdoor brand. Combining their passion for well-made kit and the lessons they’d learned with other companies, they started to build their own brand, designing products and selling them online.

“What they did was unique at the time,” says Alpkit’s chief executive, David Hanney. “They combined really good products with same-day dispatch and people ready on the end of the phone to help customers. They built a really lovely outdoor brand.”

Although the Nottinghamshire-based company predominantly designs for the domestic market, they’ve reached more than 30 million customers worldwide over the last 15 years, and around 30 per cent of their web traffic is now international.

In the past three years, Alpkit has opened stores in Keswick, Ambleside and Hathersage.

Short supply chain

“What's really special about us is our design capability and the fact that we're essentially a team of designers who love making outdoor products,” says David. “Added to that is the fact that we sell direct to our customers online and in our stores. That short supply chain makes us a lot faster to market.”

The structure and strategy of the company allows them to react more quickly to customer feedback and demand, and pricing can be very competitive because the product passes through so few hands.

But David would be the first to agree that successful growth depends on the ability to finance stock and that means managing working capital expertly. The company keeps its product range very tight. Every item is made with a specific activity and user in mind to avoid the sort of proliferation that leads to duplication and excess stock.

“The traditional retail model is to fill your estate twice a year and then sell it all before the next season arrives. We have a much smoother flow with no huge consignments of stock arriving – a conveyor belt rather than feast and famine. We manage never to have more than we need,” says David.

Successful growth depends on the ability to finance stock and that means managing working capital expertly.

David Hanney, Chief Executive, Alpkit

Fluid, flexible and funded

The downside, of course, is that the company doesn’t have a large reserve to call on if demand for a particular product goes up. And one aspect is definitely outside their control – the weather.

“Last year we had snow before Christmas and this year it was forecast to fall in January. This obviously affects what our customers are buying,” says David. “But our agility means that’s less of a problem for us than for some of our competitors.”

Being able to buy stock on a more fluid basis means Alpkit needs the cash to pay for it.

“We'd been looking to work with HSBC for a good while and it's great that the bank is supporting us,” says David. “This package matches the working capital needs of our business. It's a four-month financing line, which means we can pay our supplier and then, four months later, we pay HSBC. It's a great product for a fast-growing retailer.”

David is also enthusiastic about the flexibility of the funding, which can grow as the company expands.

“You also get a very clear early warning if things aren't going quite right because you can see what you’ll need to pay back in four months,” he adds. “You can't sit on a problem and let it rest, which is a real positive.”

There’s also a real positive for the region, as Alpkit plan to take on another 40 people over the next few years, open more stores and increase manufacturing from their Nottingham HQ. They’ll also be able to boost their e-commerce to reach more international customers.

"The funding will also increase our import capabilities by up to 30 per cent a year, meaning we can raise our stock levels and meet the needs of our growing customer base,” says David.

“Good retailing is all about good stock control and good buying. Managing the flow of stock and the product range is critical. It’s the commercial pulse of the company. We’ve created a supply chain that lets us turn stock quickly but also still offer great availability.”

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