What: Inventory management has become an advantage for Macy’s in a tough retail environment.

Why it is important: Macy’s margins and profits fell last year with a small sales decline, but the impact was lessened thanks to their disciplined inventory management.

Macy’s CFO has pointed to inventory productivity as a value creation lever.

The department store leveraged data and analytics to better forecast sales demand, receipt timing, and flow across supply chain.

In the first quarter, the retailer saw signs of consumer weakness and a shift in category demand. As a result, they adjusting the timing, amount and composition of receipts by channel, category and brand.

They also adjusted purchasing accordingly as economic challenges didn’t let up during the year. During Q4, the department store bought closer to need, help open-to-buy reserves and bought into areas of strength.

Inventory levels at the US department store declined 3% last year and have fallen 18% compared to 2019. Inventory turnover was also down 4% last year but has improved by 19% since 2019.

The retailer has been relying more on data and analytics with plans for more inventory productivity initiatives for 2023, as more than two thirds of their USD 1.3 billion in capital expenditures last year went towards data and analytics or other supply chain modernization.

Disciplined inventory management helped Macy’s weather tough 2022