And so it is with articles and commentary about this coming Holiday Season, specifically about retailers' inventory and margins.
Nevertheless, there is considerable good news being trumpeted. Most recently, this feature article in the Wall Street Journal: "Retailers Hone Inventory for Holidays" *
- "Retailers that had big inventory glut problems have worked through the worst of them."
- "Mark Mathews, executive director of research at NRF, notes the inventory-to-sales ratio for retailers – excluding those selling cars – has returned to 2019 levels."
- "'Our view is that inventory is much better positioned than last year,' said Lorraine Hutchinson, retail-sector equity analyst at BofA Global Research."
But friends, the really good news lurks behind the media's reporting.
- Sure, the industry's inventory is in line.
- Sure, things appear to be closer to getting back to normal.
- Great. But for independent retailers it means much higher margins because you'll take many fewer markdowns to be competitive!
Here's why. When there's a glut of inventory in the market, what follows is a deluge of markdowns, liquidations, and panic dumping of inventory. That has to happen. That excess inventory is soaking up cash.
Ahh, but apparently not this year.
This year, with inventories in line, it's wise to think fewer (panic) markdowns, and to look for higher margins.
Sounds like fun, doesn't it?! And isn't it about time for good news?!!
* "Retailers Hone Inventory for Holidays", Jinjoo Lee, The Wall Street journal, November 6, 2023.