Wholesale Inventory Data Shows Value of Real-Time Tracking Amid Softening Demand

Government data released this week hints that retailers are in for a protracted struggle through the next few months.

And with stock moving slowly through the channels, the pain points spotlight the need for real-time means of gauging consumer demand, which would benefit each of the links that, taken together, make up various supply chains.

To that end, Commerce Department data this week showed wholesale inventories in the United States were virtually unchanged at $918.5 billion in March as measured against February. Wholesale inventory sales were down 2.9% through the same period.

The inventories represent the goods in the channel, held by wholesalers, yet to be sold to merchants. The wholesalers are the links between the firms that manufacture goods, the retailers and end customers. If there’s no drawdown of wholesale items, it means retailers have been tempering their orders due to sluggish customer demand. The retailers may be seeing a marked slowdown, may be anticipating one, or may not have insight into that demand at all. Caution is the mindset of the day.

Inventory-to-Sales Ratio a Key Metric

The inventories-to-sales ratio for the wholesalers was 1.4 in March, where it had been 1.37 in February. Last March, the ratio was 1.25. It’s taking longer to sell goods to clear the virtual and brick-and-mortar shelves.

There has been some volatility in retailers’ earnings results these past several weeks. Adidas, for instance, has more than $1 billion in unsold Yeezy inventory. Hasbro, for its part, is finding demand for toys is down.

The inventory-to-sales ratio in apparel, per the latest data, stands at 3 in March, where it had been around 2.3 last year.

PYMNTS research has shown that retailers are making strides in embracing and adopting the technologies that allow for better insight — via real-time analytics — into how their inventories are faring. The report “Big Retail’s Innovation Mandate: Convenience and Personalization,” found that 68% of automotive merchants, 61% of grocery merchants, 50% of general retailers and 42% of convenience stores and pharmacies plan to offer real-time inventory status notifications. Those features can help merchants cement consumer loyalty and avoid stockouts.

But the same data, which gives a clear-eyed view of what consumers want — and when they want it — can have a positive impact on the relationships between merchants and their wholesalers. Better visibility at the retailers’ level can funnel into more efficient ordering when it comes to their suppliers, which in turn means that the wholesalers need not have to grapple, as they seem to be doing, with unsold goods.

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