Lower retail inventories - by design?

Discussion in 'General Survival and Preparedness' started by DKR, Feb 1, 2016.


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  1. DKR

    DKR Interesting ideas, interesting stories

    I was cruising the web, and found an interesting post. It (seems) to say that retail inventories are low because:
    1) Retailers don't want you to be able to 'stock up'
    or
    2) Inventories are low because the store is in the hurt locker/getting ready to close...

    What are you seeing at your local outlets?

    We had local shortages because a re-supply ship was down for repairs. 80% of all goods and nearly all food comes to Alaska by ship.

    This appears to be a national trend.....according to this post. Hence my question of what is actually seen on the ground.

    ********************************
    #1 (From DJ, January 24, 2016)

    "Steve-

    [Regarding the] alerts about the current state of the RR industry. This is in line with what I've been noticing as I visited our local/regional grocery store, Walmart, and Target this week in WI. I worked in big box retail for 20 years specializing in Inventory Management. These stores are all using computerized inventory management systems that monitor and automatically replenish inventory when levels/shelf stock get low. This prevents "out of stocks" and lost sales. These companies rely on the ability to replenish inventory quickly from regional warehouses.

    As I shopped this week and looked at inventory levels I was shocked. There were numerous (above and beyond acceptable levels) out of stocks across category lines at all three retailers. And even where inventory was on the shelf, the overall levels were noticeably reduced. Based on my experience, working for two of these three organizations in store management, they have drastically/intentionally reduced their inventory levels. This is either due to financial stresses/poor sales effecting their ability to acquire new inventory, or it could be the result of what was mentioned earlier regarding the transporting of goods to these regional warehouses. Either way this doesn't bode well for the what's to come. Stock up now while you can!"

    #2 (From a Commenter following up #1 who didn't provide a name, January 26, 2016)

    "I'd like to tailgate on the SQ Alert "based on my experience…" regarding stock levels in big box stores. This weekend we were in two such stores, each in fairly isolated communities which are easily the communities' best source for acquiring grocery items in quantity.

    I myself worked in retail (meat) for thirty years so I know exactly what a well-stocked store looks like, understand the key categories and category drivers, and how shelves are stocked and displays are built to drive sales and profits. I also understand supply chain and distribution methodologies quite well.

    Each of the stores we were in were woefully under-stocked. This time of year-the few weeks following the holidays-is usually big business in groceries and low stock levels suggest either poor ordering at the store level, poor purchasing at the distribution level or a purposeful desire to be under-stocked.

    Anyone familiar with the retail grocery industry is also familiar with how highly touted "the big box store's" infrastructure is. They know exactly when demand is high and for what items and in what quantities. It is very unlikely that both stores somehow got "surprised" by unusually high demand. It is reasonable then to imagine that low stock levels in rural areas with few options is a purposed endeavor to assure that both the budget conscious and the folks in more remote areas are not fully able to load up their pantries.

    Simply put I believe the major retailer in question is doing their part to limit the ability of rural America to be sufficiently prepared. Nevertheless, we are wise to do our best to keep ahead of the curve. God bless your efforts, Steve."

    *****

    Yes, this is just anecdotal evidence, but it lines up perfectly with hard numbers that I have been discussing on The Economic Collapse Blog.

    Exports are plummeting all over the globe, and the Baltic Dry Index just plunged to another new all-time record low. The amount of stuff being shipped around by air, truck and rail inside this country has been dropping significantly, and this tells us that real economic activity is really slowing down.

    If you currently work in the retail industry, your job is not secure, and you may want to start evaluating your options.

    We have entered the initial phases of a major economic downturn, and it is going to be especially cruel to those on the low end of the income spectrum. Do what you can to get prepared now, because the economy is not going to be getting better any time soon.
     
  2. BTPost

    BTPost Old Fart Snow Monkey Moderator

    Yea, I saw that Tote had an issue with one of their ships... Just goes to show, what will happen when the Cargo Vans quite coming in... if Alaska Marine Lines quite sailing to southeastern Alaska, most of those towns would be starving in two weeks....
     
  3. DKR

    DKR Interesting ideas, interesting stories

    Yeah - one the hazards of living in Alaska - or HI.

    I'm wondering about what the rest of the folks in the L48 are seeing? The stuff I quoted makes it seem like a wide, maybe a national issue owing to an economy heading for the crapper....

    Don't know - would like to hear from others on the board.

    thx
     
  4. kellory

    kellory An unemployed Jester, is nobody's fool. Banned

    So where's the profit motive in this?
     
  5. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    Reduced inventory costs. Turn storage rooms into retail space?
     
    3cyl likes this.
  6. Dunerunner

    Dunerunner Monkey

    This is cyclical. We are in inventory tax time so most retailers are reducing inventory to the lowest possible levels to avoid the tax. So, it is government driven...
     
    Cruisin Sloth and 3cyl like this.
  7. kellory

    kellory An unemployed Jester, is nobody's fool. Banned

    No, those cost are already fixed, and any influx of new product would cause storage problems and liabilities. They are already operating on JIT supplies.
     
    chelloveck likes this.
  8. chelloveck

    chelloveck Diabolus Causidicus

    You are more than likely correct kell.

    Management (or mismanagement) of JIT stock control systems, and auto replenishment systems are probably the most plausible explanations for the low shelf stock levels, at least as far as the "big box" retailers are concerned.

    There is no money to be made by stock sitting on the shelf, indeed, there is money to be lost by excessive stock sitting on the shelf: through spoilage, theft, breakage, obsolescence, changes in consumer preferences, lost opportunity costs of invested money making a better return on investment elsewhere etc etc. The return on investment happens when the consumer actually pays for the item taken off the shelf at the checkout. So, just enough is kept in store inventory with expectation that it will meet reasonably predicted consumer demand: no more....and no less than a conservative fudge factor to account for a small variation in consumer demand and the ability to immediately supply that demand JIT.

    The problem is that JIT relies on a number of assumptions that cause cumulative hiccups along the supply chain when those assumptions get shredded by events in the real world: like suppliers not being able to meet contracted supply because of hiccups in their own JIT inventory management systems; like transport delays due to industrial action, weather, breakdowns, scarcity of available transport, fuel availability issues etc etc. Or because of an unexpected spike in consumer demand, due to a blizzard that has struck town, and the multitudes of residents who don't have a nuclear winter's supply of their favourite snacks in their pantry, are desperate for the last Twinkie in the town's supermarket.

    I don't think that there is some grand conspiracy among retailers to deliberately restrict inventory holdings so that paranoid prepping people can't build up a 10 year supply of Twinkies and Oreos. YMAPMV *

    * Your Mileage and Paranoia May Vary
     
  9. HK_User

    HK_User A Productive Monkey is a Happy Monkey Site Supporter

    JIT has been the norm for over 20 years.

    Business as usual.

    DEFINITION of 'Just In Time - JIT'
    1. An inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.

      This method requires that producers are able to accurately forecast demand.
     
  10. DKR

    DKR Interesting ideas, interesting stories

    "As I shopped this week and looked at inventory levels I was shocked. There were numerous (above and beyond acceptable levels) out of stocks across category lines at all three retailers. And even where inventory was on the shelf, the overall levels were noticeably reduced. Based on my experience, working for two of these three organizations in store management, they have drastically/intentionally reduced their inventory levels. This is either due to financial stresses/poor sales effecting their ability to acquire new inventory, or it could be the result of what was mentioned earlier regarding the transporting of goods to these regional warehouses"

    I'm pretty skeptical of stuff found on the net. But given the bare shelves here locally, I thought it prudent to at least ask the question.

    If everyone is seeing normal levels of groceries, l'll thank everyone for their time to reply and ask that a mod to spike the thread.
     
    Dunerunner, HK_User and chelloveck like this.
  11. BTPost

    BTPost Old Fart Snow Monkey Moderator

    I can do that.... Done
     
  12. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    When sales are down, profits are down, inventories drop. Follow he Baltic Dry Index as it is a leading indicator of future consumption (therefore, inventories)
     
    mysterymet likes this.
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