On Thursday, we’ll get a glimpse of how retailers have been preparing for the holiday season, when the Census Bureau reports how much inventory wholesalers built up in September.
Tuesday morning, we learned that inventory levels rose in October, according to the Logistics Managers’ Index. That’s a sign that holiday shopping supply chains are working like they’re supposed to.
This is a busy time of year at Rothmans, a men’s clothing store in New York. Co-owner Ken Giddon said customer demand this year has been especially strong.
“Corporate events are back, Christmas parties are back, holiday parties are booming, and weddings are still booking up like crazy,” he said.
To prepare for the holiday season, Giddon said he started loading up on clothing inventory in September and October, which is about when he would usually stock up on inventory before the pandemic turned inventory management into a logistical nightmare.
“I called one of my larger suppliers a few minutes ago, and he was saying everything is back to normal,” said Giddon. “And I said, ‘Well, why’s it back to normal?’ And he said, ‘Because it’s normal.’”
In other words, supply chains are running more smoothly. Businesses don’t have to stock up on holiday goods really early, and they don’t have to worry about a potential recession.
“You can see, certainly with the supply chain community, a feeling of optimism,” said Dale Rogers, a supply chain professor at Arizona State University who helps puts together the Logistics Managers’ Index.
It found that last month, the logistics sector — meaning warehousing and transportation — grew across the board. Companies stuffed more goods into warehouses and onto trucks.
“And it’s nice, slow growth,” said Rogers. “That shows you that things are in good shape. That’s like a sweet spot of where you want to be.”
Retailers are also trying to be smarter about their inventory levels. For instance, a lot of big retailers are being cautious about loading up on too much product, according to Brian Yarbrough, consumer research analyst at Edward Jones.
“Retailers have taken the opinion that they would rather run lean and miss out on some sales than be too heavy like they basically were for a lot of them during 2023 and some of them for 2024,” he said.
Retailers are also keeping an eye on inventory costs. Ken Giddon at clothing store Rothmans said he’s cut the number of suppliers he works with in half to do more business with fewer vendors.
“So that can lead to potential discounts in buying, some ability to return goods at the end of the season,” he said.
Giddon added that the pandemic taught retailers how bad things can get — and changes like what’s happening now help his business be better prepared.
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