Trends in retail inventory performance: 1982 – 2012

This paper reports on empirical research focused on temporal trends related to the inventory performance of U.S. retailers between 1982 and 2012. Prior research, which reported on temporal trends of inventory performance, investigated only inventory turnover, resulted in somewhat conflicting results, and did not account for the impact of either firm size or net margin on inventory performance. This research accounts for the impact of both firm size and net margin and examines trends of both inventory turnover and inventory to assets. Results related to inventory turnover reconciled the conflicting reports from previous research, showed a significant impact of firm size to trends, and revealed a positive relationship between inventory turnover and net margin. Results related to the inventory to asset ratio revealed an unexpected relationship with gross margin, no relationship with net income or sales surprise, and a decreasing temporal trend. These results suggest that inventory to asset ratio may be a poor measure of inventory performance.