Macy’s inventory percentages have rung warning bells at its stores this past month. By the end of October, inventory was up 4.6 percent due to the incoming holiday season and new winter merchandise. Sales for Macy’s have also dropped, causing other department stores’ sales to drop as well. Because of this inventory pile up, Macy’s has marked down many of their products to clearance in hopes of attracting thrifty customers. In its last quarter, Macy’s CFO has reported that they will need, “to liquidate this inventory in the fourth quarter so that we can maintain the flow of fresh new merchandise.”
I agree with this statement that Macy’s CFO Karen Hoguet says. Based on what I’ve learned about inventory and operations, high inventory is never a good thing. A company’s quick fix to this usually results in clearance sales and mark downs. Though this is a quick fix for the short run, I believe that operation changes should be made on the way that inventory is dealt with. If the company can find a way to generate a fluid flow of merchandise that will benefit them in the long run, it can improve sales and increase efficiency for the company altogether.
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References:
- “Macy’s Sales Continue to Slump.” WSJ. N.p., n.d. Web. 16 Nov. 2015. <http://www.wsj.com/articles/macys-reports-disappointing-sales-1447248170>.
- “Macy’s Cuts Outlook, Says Markdowns on the Way to Clear Elevated Inventory.” Www.theprovince.com. N.p., n.d. Web. 16 Nov. 2015. <http://www.theprovince.com/business/fp/macys+reports+lower+sales+trims+profit+forecast+2015/11508764/story.html>.
- “Macy’s – Shop Fashion Clothing & Accessories – Official Site – Macys.com.” Macys. N.p., n.d. Web. 16 Nov. 2015. <http://www.macys.com/?&cm_mmc=GOOGLE_Trademark_International-_-Macys%2BTrademark%2BExact%2BCAN%2B-%2BG_Macy%27s%2BCanada-_-43774054774_Exact-_-macys_mkwid_sqNMXP9D8%7Cdc_43774054774%7C-%7CqNMXP9D8>.
- Ramakrishnan, Sruthi. “Mounting Inventory at Macy’s Is Ringing Warning Bells at Department Stores.” Business Insider. Business Insider, Inc, 11 Nov. 2015. Web. 16 Nov. 2015. <http://www.businessinsider.com/mounting-inventory-at-macys-is-ringing-warning-bells-at-department-stores-2015-11>.
Great analysis. High inventory can definitely be a red flag, especially when it’s not matched by strong sales. While clearance markdowns may help in the short term, they can also hurt brand perception if overused. I agree that streamlining operations and improving demand forecasting would be a more sustainable approach. It’s all about finding that balance between meeting seasonal demand and not overstocking.
Beyond markdowns, Macy’s could benefit from predictive inventory modeling and better demand forecasting to align stock levels with seasonal and regional trends. Additionally, improving supplier collaboration and adopting a more flexible replenishment system could help maintain a steady flow of merchandise without overstocking. Efficient inventory flow not only reduces the need for clearance sales but also improves customer satisfaction by keeping popular items available consistently.