Retail Viewpoint: How To Alleviate Inventory Issues In The Short And Long Term

We've spoken of shifts in consumer sentiment and spending habits as a pandemic- and post-pandemic phenomenon, but it's clear they are no longer just trends: these changes are here to stay.

Retailers are facing the pressure as inflation has decreased consumer spend while heightened interest rates have made capital more expensive than it has been in quite some time. Geopolitical tensions further exacerbate concerns as the Suez and Panama Canals, two of the world's major supply chain channels, are operating well under capacity due to Houthi Red Sea attacks and severe drought.

Given the uncertainty, retail executives are forced to reassess how to best deploy capital to maximize return—and inventory management is front and center. While many retailers have improved their inventory position since the pandemic, our analysis shows others have a long way to go.