This spring, American Eagle Outfitters announced a $75 million inventory write-down and withdrew its fiscal guidance for 2025, citing macroeconomic uncertainty and operational challenges. The retail landscape is becoming more and more complex and is putting inventory precision under the spotlight. More than ever, inventory management has become not just an operational necessity but a strategic cornerstone that can make or break a business.
The Retail Environment: Unpredictable and Unforgiving
Today’s retail climate is being reshaped by a mix of economic and geopolitical uncertainties: inflation, fluctuating interest rates and shifting consumer confidence are complicating demand forecasting. At the same time, changes in trade policies, from tariffs to import restrictions, are disrupting supply planning and cost structures, requiring quick pivots that can be challenging to implement for some retailers.
Add to this the ongoing complexity of supply chain management: many U.S. retailers still depend on manufacturing and sourcing relationships abroad. Lead times remain inconsistent, and shipping delays continue to affect the entire supply chain.
All of this underscores one reality: accurate, flexible inventory strategies are no longer just helpful, they are essential.
Advertisement
The High Cost of Inventory Errors
Excess inventory ties up working capital and inflates storage costs. It often leads to aggressive markdowns just to clear shelves, which permanently erodes both margins and brand equity.
On the flip side, when inventory fails to keep pace with real-time demand, retailers miss critical sales opportunities. In today’s omnichannel environment, customer expectations are high: shoppers expect accurate product availability both online and in-store. Losing a sale to an out-of-stock item doesn’t just impact the day’s revenue; it can send shoppers to the competition permanently.
This pressure is felt across the board, regardless of sector or scale, due to inaccurate or insufficient inventory visibility.
Why Inventory Management is More Critical than Ever
Inventory is no longer just about logistics, it’s also about a retailer’s financial health, customer experience and inventory health. When inventory aligns with real demand, retailers can preserve cash flow, avoid unnecessary markdowns and protect their margins. This becomes even more vital during downturns or periods of uncertain consumer behavior, allowing businesses to stay resilient and maintain customer loyalty.
Inventory health also shapes how brands are perceived. Consistent out-of-stock notices or product unavailability will erode consumer trust. A one-time failure may be forgiven, but repeated inventory issues can damage long-term customer loyalty, which retailers can no longer afford. Inventory management cannot be treated as a back-office concern anymore; it belongs in conversations about brand strategy and customer experience.
Best Practices Retailers are Using Today
As noted in Deloitte’s 2025 U.S. Retail Industry Outlook, a third of retail executives say their organizations are making significant investments in tools that deliver accurate, cross-channel inventory visibility, a unified view of the customer and flexible fulfillment models. These upgrades aren’t just technical — they’re strategic, enabling retailers to shift from broad assumptions to tailored “mass-to-micro” execution.
So what does strong inventory management look like? Retailers that are adapting successfully tend to focus on these key practices:
- Data-driven forecasting: Retailers need to move beyond static seasonal planning and embrace dynamic forecasting based on real-time sales data, regional patterns and market indicators. Accurate predictions reduce overstocking and help ensure high-demand items stay available.
- Responsive merchandising strategies: Product assortment decisions should reflect what customers are actually buying, not items forecast six months ago. Frequent review cycles, informed by point-of-sale data and consumer insights, help ensure that inventory aligns with demand.
- Resilient supply chains: Companies are mitigating risk by diversifying suppliers, nearshoring production when feasible and investing in more flexible procurement models. This gives them a better ability to react as global circumstances evolve.
- A culture of continuous refinement: Inventory discipline isn’t a one-time fix. The most successful retailers are open to learning from past discrepancies, examining root causes and building systems that get smarter over time.
Inventory as a Strategic Priority for 2025
The lessons of the past year are clear: inventory management is no longer a tactical concern, it’s a strategic differentiator. Whether it’s preserving profitability, safeguarding customer experience or enabling business agility, inventory sits at the core of successful retail operations.
Executives Can’t Afford to Treat These Issues as Isolated Supply Chain Matters
At NRF 2025, C-level panels echoed this shift: supply chain resilience and real-time inventory transparency were no longer considered back-office priorities — they were treated as direct enablers of growth and brand trust at the board level.
In 2025, a competitive advantage will belong to brands that treat inventory health as a boardroom-level priority, aligning teams, tools and decision-making around the shared imperative for better visibility, tighter execution and greater flexibility.
The margin for error is shrinking. But with discipline, data and attention at the highest levels of leadership, retail organizations can turn inventory from a liability to a long-term asset.
Bruno Bakker is the Director of North America Retail at Nedap. He works with leading apparel and general merchandise retailers to help align technology, strategy and operations in service of better customer experiences and operational performance. Bakker has over a decade of global retail technology experience and is based in Boston.
