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Retailers Are Lightening Their Shelves, But That Won’t Save Them Forever


Retailers are trying to be disciplined about their inventories, and while this is a step in the right direction, experts say it may not be enough.

Inventory levels have been at their healthiest since Q4 2013, and experts project sales will increase for specialty retailers by 2.5% in Q3, while inventories rise by only 2.2%. These controlled inventory levels mean retailers may end the year with less merchandise they'll be forced to discount, the Wall Street Journal reports.

But leaner inventories won’t solve retailers’ main problem—consumers have become accustomed to a heavy sales environment. “At the end of the day, all a retailer can try to do is put out the right amount of perfect product,” says Nomura analyst Simeon Siegel.

Pricing power ultimately has less to do with achieving the correct inventory balance, and more to do with creating a product so perfect picky customers will buy it even when it’s never on sale. [WSJ]