Innovations Article 3
Retailers rethink Inventory Strategy –
Link: https://www.wsj.com/articles/retailers-rethink-inventory-strategies-
1467062280?mod=article_inline
Process/ service Innovation
In 2016, Home Depot decided to adopt the process “less is more”. The giant decided to store only
days’ worth of inventory in their warehouse and stores. The idea behind this is to rethink their past
strategic direction. In the past, the consumers were more likely to physically come to a store and buy
what ever they needed. But today, they have the option of online shopping. So, from a strategic and
financial standpoint, reducing physical inventory in stores and instead increasing inventory in
distribution centres will allow companies to save more as well as deliver faster. The article highlights
that inventory is usually a retailer’s highest cost and therefore adapting to this new process will help
them and the consumers with the basic essential of retail.
I found this article interesting because, a retailer like Home Depot is not really known for selling
essentials or high demand products. I would expect such a process change from clothing stores like
Zara or maybe Walmart, Target. Although, Walmart and Target are enroute to make similar changes
in their supply chain; Home Depot were one of the early adopters of this process.
Similarly, Supreme, is known for creating more demand in the market by producing only a few pieces
of its brand. Once these items are sold, you can find these products on second hand sites for a
premium. In my opinion, this strategy is so unique and counterintuitive and questions the basic
marketing strategies that we learn in school or work. Why would a company choose to offer on 20
pieces rather than sell to a million? It has definitely attracted a lot of consumers but can everyone go
this route?