Bunnings Warehouse is set to make immense changes that will affect the supply of certain items after it decided to tighten its inventory post-Covid amid fears of factory shutdowns and lockdowns in China, the world's second-largest economy.
In a letter to suppliers, Bunnings merchandise director Jen Tucker said the hardware giant is calibrating its stock to slim down on lower-selling "niche" items as it instead stocks empty shelves with products that better match demand.
"With the most disruptive phase of the pandemic-related supply challenges behind us, it's pleasing to see our in-stock performance continuing to improve," Ms Tucker wrote.
"With more stock now in stores and our warehouses, we're continuing to calibrate our inventory management to ensure we have the right stock for customers."
While Tucker did not go into details about which particular stocks will be reduced, she said the company will keep the process fluid in order to meet shifting customer demand.
Demand for DIY dropping post pandemic
With the worst of the coronavirus pandemic behind the country, Barrenjoey analyst Tom Kierath told The Australian that demand for do-it-yourself products that peaked at the height of the Covid pandemic is now likely going to see a downturn as Australians return to travel.
"The dynamic here is that all the retail, do-it-yourself products that they sell, the demand for that has been really strong through Covid because people were stuck at home with nothing to do," Keirath said.
"Now they're out travelling and so the demand for those products is going to be lower than what it has been in the last couple of years."
Westfarmers-owned Bunnings, however, is not alone in re-evaluating its inventory in the aftermath of the Covid pandemic.
Many companies that invested heavily in "safety stock" to cover supply chain disruptions in 2020 and 2021 have been quite busy trying to get rid of what is now "dead stock" through massive sales, especially in online retail.
Softer demand and elevated inventories have taken a toll on certain retailers, including e-commerce site Kogan.com, which saw its business fall into the red by $3.5 million in the March quarter, sending its shares into a nosedive.
Learning from its mistakes, the online retailer in August addressed investors, saying it will be focusing on operational efficiency and will be taking steps to cut costs, which includes reducing its range of under-performing products.
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