American Eagle takes a page from fast fashion

Most RetailWire panelists agreed with me (on a recent discussion thread) that American Eagle is wise to grow its inventory at a slower pace than its sales. It’s really an overdue effort to learn from the best practices of fast fashion retailers, and here’s my comment:

If any of the “Three A’s” of specialty retail had figured out how to improve their supply chain and product development, they probably would not have lost as much market share to the “fast fashion” masters of the art like Forever 21, Zara and H&M. It’s not just about the right merchandise content, but also about speed to market — and speed to exit a downtrending idea. Cutting down on lead times, and sourcing closer to one’s stores, is critical to making it happen.

So American Eagle is right: There is no reason why inventory levels need to grow at a faster pace than sales growth. In fact, just the opposite…if “just in time” sourcing and smart inventory allocation are working as they should.

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