Where Did Excess Inventory Go?

After an excess-inventory-filled 2022, shippers enacted solutions to reduce stocks. Supply chain strategies like discounts, promotions and SKU rationalization were the norm.?

Brands like Gap spent 2022 eliminating excess inventory. At its peak, Gap held $3.04B in product. Through heavy markdowns, they worked through its overstock, ending 2022 with $2.4B in stock and a 21% YoY inventory reduction.?

Others followed similar paths. Target held a three-day savings event at the beginning of October to entice customers with discounts and promote early holiday shopping. By doing so, Target alleviated some inventory pressure, dropping levels by 3% YoY.?

But current macroeconomic uncertainty muddles brand supply chain plans. January retail sales defied expectations jumping 3%. But then fell again in February.?

Consumer sentiment waffled as well after four months of gains. In some areas, indicators are strong. While in others, the opposite is true.?

As a result, retailers started to hold less inventory and shift power from suppliers. Gap plans to balance supply and demand by chasing inventory, leaning on vendor-managed stock and responding quickly to customer trends.?

Companies that eliminate slower-moving SKUs reduce stockouts and lower inventory costs by 10%. Because storage fees, insurance and labor costs account for 30% of inventory spend, SKU reduction remains a favorite for brands.

Learn more at the Flexe Institute.