Have retailers gone too conservative for 4th quarter?

Doing some catching-up on recent Retail Wire posts. The following touches on inventory commitments that retailers made for fourth quarter based on worst-case-scenario plans. Things aren’t great today but certainly better than six months ago…will retailers be able to react, or will overly cautious inventory levels become a self-fulfilling prophecy? My opinion:

The fourth quarter may not see positive comps but is also unlikely to see the kinds of double-digit declines suffered late last year and early in 2009. Unfortunately, many plans were made and commitments given during the darkest days of the downturn. Yes, many retailers run the risk of compounding what will probably be a soft sales environment anyway by running out of most-wanted goods and sizes.

A few broad-brush suggestions for solutions: First, make sure that your supply chain management does the best possible job replenishing the highest-priority stores and getting the right sizes and colors into the right doors in the first place. Second, if you are heavily dependent on private-label goods, make sure your sourcing teams are geared up for fast-reaction replenishment, especially from the Caribbean and Latin America, as an alternative to that “slow boat from China.” Third, partner with your domestic vendor network on some shared risk/replenishment strategies, so there are branded goods on the shelf available to pull if demand requires it.


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