Is there a downside to retailers having good inventory management? Yes and no. Yes, because good inventory management leads to fewer products companies have to sell at deep discounts. But no, because it also saves retailers a lot of money, so they can lower their prices and be more competitive.
In other words, outlet stores could soon be a thing of the past if retailers’ inventory management keeps improving.
J.C. Penney recently announced it will close down virtually all of its outlet stores because it is running too efficiently to have enough extra products to sell at a discount. The clothing retailer uses inventory management software to balance its inventory needs. It has done such a good job that it is now able to focus on its core business of department stores and get rid of unprofitable sides of its business.
It might seem like bad news for consumers that J.C. Penney is closing its outlet stores. No more deals, right? Actually, the more retailers who use inventory management software, the more downward pressure there will be on prices. As companies reduce the cost of doing business, they can cut prices to take customers away from their competitors.
Good inventory management is a winning strategy for both businesses and their customers.