Retail

Retailers Stocking Less Inventory In Hopes Of Increasing Profits

Retailers like Home Depot are hoping to boost profits by paring down inventory.

As more and more retailers try to figure out how to serve their growing online customer base while also keeping costs under control at their brick-and-mortar locations, The Wall Street Journal reports that many are slimming down their in-store inventory as a way to try and reduce overhead and maximize profits.

“Get comfortable with days of inventory, not weeks,” said Tom Shortt, Home Depot’s senior vice president of supply chain. Shortt told The Wall Street Journal he is advising his store managers as the company aims for a 15 percent increase in sales by 2018.

In order to do this, Home Depot plans to focus on keeping its inventory levels flat or slightly below where stores have needed them in the past.

Home Depot will also get fewer deliveries at its 18 sorting centers and plans to space its deliveries out over a longer time span throughout the week rather than getting “slammed” with numerous delivery trucks a couple of times each week.

A more frequent delivery schedule will also help to improve in-store stock levels, as items that move more frequently will be replenished faster, while those that don’t won’t need to linger in warehouses and stockrooms. Home Depot is also having workers now move their products directly from the delivery truck to the premium lower shelves of the store, instead of “storing” them on a higher shelf and having to use a ladder or a forklift to reach them as needed.

Other large retail brands, like Walmart and Target, are following suit by paring down the number of bulky items like packages of diapers or laundry detergent they keep in the storeroom to try to get those bulky products onto shelves faster and avoid them taking up too much of the store’s real estate.

Retailers now can tie up less capital in costly inventory that sometimes takes up space in warehouses or stockrooms for weeks or months and instead focus on meeting the needs of their ever-growing online shoppers instead.

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