Planning For Holiday Inventories

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TWICE:Given the sudden rush of events in the world financial markets, are retailers cutting back on the amount of holiday inventory they had previously planned for, and, if so, what are you going to do with the excess goods? Are manufacturers taking them back?

Jeff Davis, D&H Distributing: D&H hasn't seen a cutback on holiday inventory. In fact, there's been a very aggressive ramp-up for Black Friday and Cyber Monday sales.

We prefer to be more proactive up front, and help to right-size the initial buy. We have a great logistic model that we can leverage for quick delivery, providing more of a just-in-time inventory model, to avoid returns. D&H favors proactive forecasting as opposed to an ambiguous approach, which adds additional costs to goods via returns.

David Kaplan, Digital Delivery Group: Most of our dealers are independent custom integrators who purchase inventory on a just-in-time basis. We are working diligently with our vendors to forecast demand and make necessary adjustments before the goods ship. The sudden rush of events in world financial markets may affect us differently than typical distributors. Obviously we are taking all necessary care and caution but we also know that our dealers need us to have inventory when they need it rather than at our convenience.

Brian Wiser, Ingram Micro: Computers and consumer electronics are more just-in-time fulfillment or build-to-order industries. They have shorter inventory lead times then perhaps what is needed for toys or apparel. This gives retailers more flexibility on inventory control.

Ingram Micro's strengths include managing inventory, supply-chain management, drop ship and delivery, which enables retailers to be nimble with just-in-time fulfillment. Given the current economic climate, retailers may be more sensitive around inventory levels.

RJ Hirshkind, ADI: We are proactive with our vendors on inventory, which allows us to have the correct product levels. We have great relationships with our suppliers and have been in constant communication with them to try and plan for any changes in expected sales as a result of the market activities.

Also, through our Vendor Information Program (VIP), we provide manufacturers with access to online information including sales, support, finance, operations, marketing and product management. With access to this metric information, vendors find it easier and more efficient to do business with ADI.

Joel Blank, ArchBrook Laguna: I think the biggest challenge our customers face this year is predicting where the market will go and which products consumers will demand. With that in mind, we work very hard to accurately forecast demand with our retail partners — of course, anything can happen to interrupt the flow of products, but we have enhanced our systems to ensure that when we have the supply, their customers will have the products in time. With that, we truly do partner with manufacturers to make sure that the forecasts they use are in line with the channels' requirements and work to close the gap by managing the market expectations.

TWICE:Keeping with the holiday theme, what's your overall holiday outlook in the face of this economic confusion? How do you expect your business to fare? What are your expectations for the industry overall?

David Weisman, The Advantage Group: Confusion is the right word and we do not expect clarity before the holidays. We expect no change from today's difficult business environment. [As for my expectations for the industry overall, it will be] challenging. Good decisions on inventory and very strong operating cost control are the order of business for this year's Q4.

Trevor Hansen, Volutone: We are affected by holidays. [As for the industry], we feel it will continue to grow as long as the demand is there to support it.

Jeff Davis, D&H Distributing: D&H is diversified in many categories, which should allow us to fare well throughout this holiday season. We are optimistic that business will be strong this holiday; we are still forecasting good growth over last year.

Initially because of the high gas prices, we expected e-tail to rise above retail sales this season. However, as gas prices are steadily falling, we can expect retail sales to remain steady-to-flat compared to last season. If anything, so far we see more business shifting toward opportunistic shopping “events” such as black Friday and cyber Monday.

David Kaplan, Digital Delivery Group: It is going to be a difficult holiday season. We can only hope that flat-panel sales remain a bright spot and the trend to wireless retro-fit solutions brings upside sales.

John Sullivan, ADI: We see our business faring well as we offer solutions across multiple product categories (A/V, intrusion, fire, CCTV, IP, access, tools and hardware, home solutions, wire and cable). We are in a good position because we carry key product lines and offer a multitude of solutions from leading manufacturers. The industry is faced with many challenges but overall may come out stronger as more companies review their business model and make changes to perform more effectively. I think we may see some acquisitions and mergers as would be expected during a challenging time in the market.

Joel Blank, ArchBrook Laguna: Innovations, coupled with declining pricing of CE products, are opening consumer markets, but more importantly, this situation has placed distributors in the essential role of bridging the manufacturer, dealer/reseller and retail worlds. ArchBrook Laguna recognized this and has been instrumental in moving more retailers and manufacturers into a broader e-tail presence, which could prove instrumental this holiday season as consumers increasingly choose to do their holiday shopping online instead of at the mall. At ArchBrook Laguna, we are working with our manufacturer partners and customers to provide efficient service, products and programs to enable consumers to get the products they want, where they want it and at a price that makes the sale final.

TWICE:Considering your holiday expectations, are you planning any special moves or initiatives to try to lessen the likely impact?

David Weisman, The Advantage Group: [We will offer] very high service levels and as lenient as possible business rules. We need to be the calm in this storm for our dealers.

Jeff Davis, D&H Distributing: To help make dealers more competitive during the final quarter of 2008, D&H has named November its Digital Holiday Focus Month, featuring special pricing and buying incentives on some of the market's hottest-selling consumer electronics. We are trying to be more promotional this year, providing increased value and new reasons for dealers to choose us as their primary distribution partner.

David Kaplan, Digital Delivery Group: DDG will deliver marketing programs aimed at helping our dealers identify opportunities to leverage unique products such as the Soundcast Outcast and Mitsubishi's new Integrated Sound Projector LCD televisions for upside holiday sales.

Brian Wiser, Ingram Micro: We continue to support our vendors and customers promotional and incentive activities. Ingram Micro uses our strength in inventory management and supply chain to drive the highest levels of success with their promotions, especially in the fourth quarter.

RJ Hirshkind, ADI: We have planned well to try and have the right products and inventory in place. To manage inventory levels, our purchasing engine provides weekly reports on stock levels and automatically creates purchase orders based on the market, and increases and decreases in sales. Through our VIP Program, this information is relayed onto our vendors in real time.

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