Moving stock keeps retailers ahead
Too much inventory can hurt a store's bottom line, so chains like Costco and Wal-Mart have been making sure to be vigilant about keeping their inventories tight. Tamara Keith reports how this helps retailers in the long run.
A customer shops at an H&M clothing store in San Francisco, Calif. (Justin Sullivan/Getty Images)
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Renita Jablonski: Retailers will be reporting on their March sales numbers today. Many analysts predict sales will be down about a percent. Chain stores are among the companies particularly affected by the fallout of the downturn. But as Tamara Keith reports, some stores are ahead of the curve when it comes to belt-tightening.
Tamara Keith: When sales are weak like they are now, getting stuck with too much stock on hand is bad for the bottom line. That's forced retailers to shrink their inventory to bring it more in line with demand.
And some are doing a better job than others says Patricia Edwards, a retail analyst and founder of Storehouse Partners:
Patricia Edwards: Nordstrom has done a fabulous job in taking it down so that they're only holding their inventory on a basis of about 62 days, which is about half of what some of their major department store competition is doing.
She counts warehouse chain Costco and discounter Wal-Mart among the success stories. Edwards says keeping tight inventories is one of the reasons they've thrived even as shoppers cut back.
Edwards: Very much what we're doing in our own households, we are shopping from our pantries. That is, we're taking the stock that we have on hand and using it up before we order more.
It seems cost containment is the name of the game all over the place.
In Washington, I'm Tamara Keith for Marketplace.
Comments
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05/02/2009
I follow Patricia Edwards because she is smart, savvy, and not "glib" and has none of Analyst Flickinger's Upper West Side, East Hampton, prep school, "I'm better and wealthier than you" attitude. Flickinger thinks he is the smartest analyst in Retail. Patty Edwards is straight-up, "no-nonsense" and honest.
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