How Efficient Is Your Inventory Turnover?
We analyzed data from 28 UK-based fashion retailers, revealing some fascinating insights:
Inventory Turn vs. Annual Sales- Most fashion retailers achieve 1.7 to 4.6 stock turns per year, a significant variability.
- The average inventory turn drops by 5% as sales grow from £20m to £760m, indicating slight diseconomies of scale for larger companies.
- The best-performing companies can achieve up to 2.7x better inventory efficiency compared to the worst.
The line of best fit (in the chart) shows that for average performers, their year-end stock turn aligns with their annual sales. But here’s the key question:
If you're not hitting 3 turns, why not?
Improving inventory efficiency can drastically impact your bottom line. Even in a competitive industry like fashion, individual companies have the potential to leap from the lower to the upper end of the spectrum.
Does your performance align with this analysis?
If you have access to Martec’s Retail and Consumer Goods Industry WIK and would like more information on how to improve inventory turn click here and also this one.-
Posted by Brian Hume
13th December 2024
