Holiday Inventory Levels Down

It may be harder to find last minute holiday gifts this year as major retailers are cutting inventories in an attempt to streamline supply and demand. The Boston Globe reports that Saks Fifth Avenue is cutting holiday inventory by 20 percent, J.C. Penney by 14 percent, and Wal-Mart by 6 percent.

Last year retailers had to discount some goods up to 70 percent to move them. This year, retailers are willing to face stock outs rather than a glut in inventory and heavy discounting. Yet, this is a slippery slope. Shoppers like a selection and a full shelf to choose it from. Think about your local donut shop. Does that full display of jelly donuts entice you to buy one? How do you feel when you see just one orphan donut in the display case? Not too appetizing, is it?

I’m not saying that inventory management is wrong. We’ve been using it in manufacturing for many years and with some good results. Perhaps if retailers stocked the things that people wanted wouldn’t need to worry so much about excess inventory. More and more of us are value buyers. The big retailers need to get a handle on that. And soon.