Nordstrom and the Art of Inventory Management

One of the “lessons learned” from the downturn is the critical impact of inventory management on earnings. Some retailers have been caught with too much inventory and have not been nimble enough to react, given the suddenness of the slowdown last fall. Others (such as Nordstrom) have worked for years on improving their “best practices,” and are less likely to see a drop in margins even during a severe recession.

Doing less with more isn’t just a valuable tool during a slowdown but also during the inevitable bounceback. Nordstrom stores appear to have robust levels of inventories but don’t appear overly cluttered or crowded to the consumer. The lower days-of-supply also means that they can keep receipts fresh instead of tying up dollars and floorspace on clearance problems. The “next level” of good inventory management, for Nordstrom and other national chains, will be to get the right content–as well as the right levels–in the right locations, not just through regional buying but through strong centralized systems.

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