Comparison of Orbit Charts at the Intersection of Operating Margin and Inventory Turns for Retail Leaders

Comparison of Amazon, Target and Walmart performance at the intersection of operating margin and inventory turns. Note that while Target operates at a higher level of operating margin that the retail giant's returns are steadily declining. In contrast Walmart is more resilient, showing less erosion in both operating margin and inventory turns in the same period. Amazon, the e-commerce leader, also had erosion of operating margin and inventory turns. Note that Amazon operates at a higher level of inventory turns, but at half of the margins of Walmart

Target recently announced a redesign of their supply chain to reduce inventory out-of-stocks. One of the major issues for Target is the redesign of the supply chain to support omnichannel replenishment. Target has been slow to invest in supply chain capabilities to test-and-learn across channels, and is less effective in data sharing with suppliers than Walmart.

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