Australian retailers are shifting from pandemic-era safety stock building to active inventory reduction as supply chains stabilise and capital costs rise.
Market Trends
Inventory Reduction
Major retailers report:
- Average inventory days: Down 15% from 2023 peaks
- Working capital focus: Board-level priority
- Markdown activity: Increased to clear excess
- Forward orders: More conservative approach
Strategic Shifts
- Just-in-case returning toward just-in-time
- Supplier collaboration on demand signals
- Category rationalisation programs
- Store allocation optimisation
Driving Factors
Interest Rate Impact
- Higher borrowing costs penalising inventory holdings
- CFO pressure on working capital metrics
- Investor focus on cash conversion
Demand Normalisation
- Post-pandemic demand patterns clearer
- Forecasting accuracy improving
- Supply chain lead times stabilising
3PL Implications
For fulfilment providers:
- Storage revenue pressure as clients reduce stock
- Faster inventory turns requiring operational agility
- More frequent, smaller replenishment orders
- Demand for flexible space arrangements
The shift requires 3PLs to adapt commercial models and operational capabilities.