How Macy’s Avoids Inventory Glut

How Macy’s Avoids Inventory Glut

Retailers across the country are struggling with inventory pileup due to 2021’s massive supply chain delays. Unloading these previous-season goods has become a top priority for the upcoming holiday and winter season. But Macy’s is singing a different tune: the retailer managed to avoid most of this inventory glut, and reported to the Wall Street Journal that more than half of its offerings for the holiday season will be new.

Macy’s inventory was up just 7% at the end of its most-recent quarter compared with a year earlier. Counterparts are not faring as well—inventory jumped 48% at Kohl’s, 44% at Nike, and 37% at Gap Inc.

How did Macy’s do it? Analyzing credit-card data earlier this year, the company noticed changing trends in spending patterns and, in response, cut orders and shifted inventory. Execs from finance, supply chain, merchandise, and planning departments decided together to move away from the pandemic big-sellers like comfy clothes and home décor items and instead increased orders of dresses, suits, and shoes for a return to office and formal wear.

Also helping Macy’s is the fact that it does not rely as much as other retailers on private-label goods. This makes it easier to adjust inventory nimbly.

Also in store: Macy’s is building its first automated fulfillment center. Located in China Grove, North Carolina, the 1.4m-sq.-ft. fulfillment center will account for nearly 30% of Macy’s digital supply chain capacity and serve customers nationwide. The facility will be equipped with automation technology to increase capacity and productivity to help drive digital sales growth.