Are retailers carrying enough inventory for Christmas?
Retail sales in September and October achieved their highest month-to-month gains since early 2014 and some see that improvement as a sign that this year’s holiday selling season may exceed expectations. While it would be hard to imagine anyone being unhappy should this scenario come to pass, might some retailers come up short because they carried too little inventory to meet increased demand?
A Wall Street Journal article points out that retailers came into this year’s holiday selling season cautious about carrying too much inventory. Companies hope to avoid having to resort to profit-cutting discounts to move merchandise. Keeping a tight lid on inventories in the third quarter helped some to improve profitability even as sales remain soft.
Another Journal article quoted Kohl’s CEO Kevin Mansell as saying he felt the chain had “momentum coming out of October.” Investments in inventory management, he said, have positioned the company to execute for both the near and longer terms.
Retailers have grappled with the light versus right inventory question for years. Many, burned by carrying excess inventories during past holidays, are determined to not repeat mistakes of the past.
But is it possible that retailers may find themselves with too little inventory on popular items this holiday season? Will out-of-stocks cause consumers to take their business elsewhere, perhaps never to return?
Toys “R” Us confronted this issue during last year’s holiday season. In an interview last December with the Journal, CEO David Brandon said, “If a customer can’t find what they’re looking for at your store, 60 percent of the time they will shop somewhere else and never come back.”
- Lighter Inventory Boosts Retailers, for Now – The Wall Street Journal (sub. required)
- Rising Wages, Tighter Inventory Spark Retail Holiday Optimism – The Wall Street Journal (sub. required)
- Struggling Toys ‘R’ Us Tries Fuller Stores – The Wall Street Journal (sub. required)
- Are out-of-stocks driving shoppers online? – RetailWire
DISCUSSION QUESTIONS: How concerned are you that retailers may not be carrying enough inventory for the holiday selling season? What are the keys for retailers looking to properly manage inventory levels for the holidays and beyond?