Report points to inventory control as top recession buster

RALEIGH, N.C. — Reduced inventory levels was the most common response to challenges faced by retail companies during the global economic slowdown.

A recent report conducted by Tompkins Supply Chain Consortium shows that almost 75 percent of companies surveyed reduced inventory levels throughout 2009, a response to recessionary pressures in 2008.

In a report entitled ‘Lessons Learned from a Tough Market,’ Tompkins says peak season sales numbers for 2009 moved in a positive direction overall, encouraging retailers to continue strategies that are working for them in the coming year.

Among those strategies were increased emphasis on forecasting and improved planning processes (employed by about 53% of companies surveyed), improving planning tools (43%), increased reporting and information flow (43%), better integrated supply chains (39%) and reduced SKUs (39%).

The survey also shows that reducing inventories did not negatively impact sales volume; inventory levels remained high enough to decrease the chance of stock-outs. Nearly one-third of those surveyed did not see any lost sales due to reduced inventory, and two-thirds lost less than 5 percent of sales due to inventory reductions. Ten percent had improved sales numbers.

Another factor that played into the successful 2009 peak season for retail companies was minimal price discounting. In general, survey respondents used less price discounting in 2009 as compared to 2008 and compared to the amount of discounting that was anticipated.

Looking ahead, retailers surveyed said that they plan to focus on the following strategies for the 2010 peak season: optimizing inventory levels and placement; improving forecasting methods; continuing to refine SKU base; and executing initiatives with suppliers more effectively.