Inventory Management is the planning and controlling of inventories to meet the competitive priorities of the organization. DSW (Designer Shoe Warehouse) improved its inventory management and is the reason for delivering its first full-year earnings growth since 2013. DSW is an American footwear retailer of designer and name brand shoes and fashion accessories. DSW was a closeout retailer when it first opened in 1991. Excess merchandise would be bought from shoe companies at a discount and then passed on to customers. The shoes acquired would often be late in the season or out of season. The unsold shoes would end up accumulating (“DSW Tries on New SKU’s and Stocks”). DSW has always tried to improve its processes. In 2009, they tested a new replenishment method in a few stores. The new method was successful and was implemented in all stores. In 2012, DSW integrated a fully automated unit sortation system. There was zero automation before that. DSW has always been adapting to changes in the market and advances in technology. “The company reported a 6.7% increase in sales during the fourth quarter with same-store sales up 1.3%. Footwear, in particular, achieved its third consecutive quarter of positive comps, according to the company.” DSW’s actual inventory declined by 2% and with less stock, the company is better able to respond to changes in the market or demand. This creates flexibility which may be a new competitive priority for the company. According to the article, this flexibility allowed DSW to focus its money on athleisure when consumer demand was high. And when temperatures dropped the company was able to put out merchandise that matched the season as consumers wanted them. “Our conservative inventory positioning at the start of the year enabled us to chase demand for seasonal boots and end the season with relatively flat goods available for sale,” said Jared Poff, senior vice president and chief financial officer.
When DSW first debuted, competitive priorities were most likely price (as they bought shoes at a discount). As the market changes, so do competitive priorities to a certain extent. It seems like DSW is shifting its focus towards flexibility. As consumer demand changes (as well as the season), DSW will shift their inventory to match the needs of the customer and the season. This is unlike the past where a DSW store would be sent a full case of shoes in different sizes, styles and colors, and once the a few pairs were out of the case, the store would be sent another case leading to some styles and sizes not being sold. Leading to accumulation and frequent markdowns. Another competitive priority DSW seems to be shifting towards is high quality. The article states that “going forward, DSW will focus on elevating its brands, reducing underperforming vendors and paring back on over-distributed labels.”
DSW seems like a very intelligent company that assesses the market and consumer demand. DSW uses this information to then cater their inventory to consumer needs. Do you think DSW is making the right move here?