Retailers Willing to Risk Out-of-Stocks

Nov 04, 2002
George Anderson

By George Anderson

Jim Skinner, chief financial officer, Neiman Marcus Group recently was quoted by the Chicago Tribune as having said, “Today, retailers are saying, ‘I’d rather forgo a sale than have excess markdowns. There’s always other stuff to buy. One of our old-time merchants said to me, ‘I’ve never seen the store empty.'”

The shaky economy and an uncertain future have many (re: most) retailers hedging their bets for the upcoming holiday season by reducing the amount of inventory they carry.

The Commerce Department recently announced that its tracking of stock-to-sales ratio (the amount of time for stocks to deplete at the current sales pace) fell to 1.22 months in August.

Retailers such as Robert Mettler, chief executive of Macy’s West, the west coast division of Macy’s are not concerned about having product on hand for consumers. “After 9/11, everybody tried to reduce inventory dramatically. What you have now is an appropriate inventory that is better balanced.”

Moderator’s Comment: What is the current state of inventory
management in retailing?

We know that someone is going to be tempted to talk about
the great Wal-Mart replenishment system. That’s fine because it is true. Let
us just say, however, that even Wal-Mart has empty holes on shelves and much
more frequently than either it or its suppliers would like to admit.

Anderson – Moderator

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