To a retailer such as H&M, its inventory is its stock of finished goods. Such inventory is important. At the end of 2015, this stock-in-trade was valued at nearly 25,000 million Swedish krona, about US$3 billion. This amounted to over 13 per cent of sales and nearly 29 per cent of total assets. Inventory at the end of 2015 was up some 28 per cent on the previous year. As noted in their annual accounts, some of this increase was due to the warm autumn weather, depressing the sales of winter clothes, leaving H&M with excess stock at the year end. These then had to be marked down in price to tempt customers to buy. Inventory management is vital to all retailers, especially those in the fashion industry. The role of inventory is to act as a buffer against differences in timing between the demand and supply. It is H&M’s policy not to hold stocks other than those on display in its stores. Some replenishment stocks are held at nearby distribution centres. However, H&M’s manufacturing suppliers are mostly based in South East Asia, several weeks’ shipping time from most of its stores.
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- Inventory Management
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- Chapter 9