Big U.S. retailers tap brakes on orders

U.S. department stores are ordering less this holiday season to keep their inventory costs down. Roselle Chen reports.

(Reuters) – Big U.S. retailers, such as Macy’s, J.C Penney and Kohl’s, are playing it safe this holiday season.

A dozen sources – company officials, vendors and consultants – told Reuters they’re buying merchandize in smaller batches with shorter lead times.

The goal? To keep inventory costs down.

They are also trying to avoid what happend during previous holiday seasons, when large piles of unsold stock led to deep markdowns, and, eventually, hit profits.

Retail analyst Trae Bodge.


“I think, it’s really about not wanting to hold so much inventory in their stores. And, so, I think they’re doing that to offset what’s happening online, creating more inventory, availability online. And, then, if a consumer is in the store and something’s out of stock, certain retailers are making moves to make it easier for the consumer to receive that product by mail. So, in a way the consumer isn’t necessarily inconvenienced, but the retailer doesn’t have to carry so much stock in their brick and mortar store.”

The strategy takes a page from the playbook of Zara and H&M. The so called fast fashion retailers consistently keep low inventories of trendy clothes and try to win customers with cheap prices.

Macy’s, J.C. Penney and Kohl’s declined to comment.