Speaker(s):  Vishal Gaur 

Title:          "Retail Inventory Productivity: Analysis and Benchmarking"
Author(s):    Vishal Gaur, Marshall Fisher & Ananth Raman

Abstract

Inventory turnover varies widely across retailers and over time. To our knowledge, the causes of the variation in inventory turnover have not been studied systematically. We develop an empirical model using financial data for 311 public-listed retail firms for the years 1987-2000 to investigate the correlation of inventory turnover with gross margin, capital intensity and sales forecast error. The model explains 66.7% of the within-firm variation and 97.2% of the total variation in inventory turnover. It yields an alternative metric of inventory productivity, Adjusted Inventory Turnover, which empirically adjusts inventory turnover for changes in gross margin, capital intensity and sales forecast error, and can be applied in performance analysis and managerial decision-making. We also compute time-trends in inventory turnover and Adjusted Inventory Turnover, and find that both have declined in retailing during 1987-2000.