Wholesale Inventories Shrink By Less Than Expected
by Christina Lee on March 11th, 2009
Steps taken by retailers to keep inventories lean are showing a bit of progress to accommodate to declining demand, as recent reports of early 2009 wholesale trade reveal.
As retail stores start sourcing their spring and summer merchandise, the National Retail Federation still expects a 5.3 percent rise in March retail container traffic from last month, a total of 1.07 million 20-foot-equivalent units (TEU).
At the same time however, such levels still fall below that of March 2008 by 7.4 percent – a trend that the trade group predicts to observe throughout the first half of 2009.
“This year’s numbers are going to remain well below last year because sales are still slow and most economists aren’t seeing a recovery before the second half of the year at the earliest,” said Jonathan Gold, vice president for supply chain and customs policy, in a statement released Friday. “Careful inventory management is a key to survival for retailers in the economic times we’re going through.”
And while retailers in some industries are still trying to shave off surplus inventory, rapidly declining sales have not made that task any easier to fulfill. A report released yesterday by the U.S. Census Bureau showed that in January, wholesale sales dropped more than four times faster than inventories.
Still, slightly declining wholesale inventory-to-sale ratios in a few categories – including apparel and miscellaneous non-durable goods – demonstrate that efforts made by retailers are still paying off, despite weak demand.
The 0.7 percent month-to-month decline in wholesale inventories also surprised economists. Seeking Alpha analysts had predicted a 1 percent decline in inventories, which now signals to them “either weaker consumption or stronger wholesale buying,” plus potentially good news later to be seen of retail sales.