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When it comes to inventory management, discipline is the name of the game going into the holidays—and for one retailer, that means prioritizing one shopping season over another.
Jo-Ann pulled back on spring and seasonal buys to keep its inventory “cleaner” for Halloween-themed merchandise, EVP Chris DiTullio told investors during a Monday earnings call.
The craft and fabric chain said the strategy led to a 180 basis point dip in its non-Halloween seasonal products during the second quarter, but the upside was that customers were more willing to shell out for spooky, shelf-filling products like its popular eight-foot skeleton.
“Customers responded immediately to the shift and are making purchases with less promotional activity and at a variety of price points,” he added.
Jo-Ann wasn’t alone. Several major retailers tightened their inventories in the second quarter to avoid a potentially margin-squeezing supply/demand mismatch.
Return to normal: In the apparel sector, both Guess and Macy’s reported a 10% YoY inventory reduction in the second quarter. Guess attributed the decline to supply chains returning to normal, making it easier to align inventory with customer demand.
“We are not buying any more or less than what we think is going to be demanded by our customers in every one of our channels,” Guess CEO Carlos Alberini said during an earnings call on Aug. 23.
A day earlier, Macy’s CEO Jeff Gennette similarly told investors he was confident in the company’s “ability to pivot to the right inventory at the right time and right value,” helping it cut back on the heavy markdowns of recent years.
The retailer cited an inventory management system that uses data science to improve the flow of merchandise. Executives also said recent investments in a more robust digital marketplace and omnichannel experience helped move product smoothly.
- Across all retailers, wholesale inventory levels were down 0.1% month over month in July, according to Census Bureau data. However, retail inventories ticked up 0.3%, though that number wasn’t adjusted for price changes.