Dive Brief:

• Changes to Bed Bath & Beyond's inventory curation and cutting "underperforming brands" has helped the company improve its in-stock levels, CEO Mark Tritton said on the company's earnings call last week.
• This has led to an in-stock level of "about 95%," Tritton said. "And definitely even higher in some of our key items, which is one of our highest statistics in many years."
• Tritton said the company is expecting to improve its inventory management even further as it works to overhaul its technology stack, which will allow the company to use artificial intelligence to manage inventory at the distribution center and store level.

Dive Insight:

The decision to cut SKUs in an effort to improve inventory levels is a decision that many retailers have made over the last 16 months. American Eagle recently said it would cut SKUs to focus on its most productive offerings. And Best Buy decided to test limited SKU offerings to help make room for fulfillment operations.

Digging into Bed Bath & Beyond's inventory figures show just how much it's letting go from its stock room. The company's inventory fell 30% year over year and nearly 39% compared to 2019, according to the company's financial filings.

When other retailers have posted similar inventory declines in recent months it's been a sign of supply chain issues keeping them from restocking to desired levels. But Bed Bath & Beyond executives underscored that the reduction is part of an intentional transition.

"We continue to transition product in preparation for the introduction of our own brands, as well as from seasonal selling and store closures associated with our network optimization program," CFO Gustavo Arnal said last week.

Tritton added that this has resulted in the company "doing more sales on less inventory. We're getting that inventory faster to the customer than ever before."

But over the last several months, the company has been outlining a technology transformation that will help to improve inventory management and fulfillment. The company says it is still working to stand up all the components of its new IT ecosystem.

"We selected Oracle as our enterprise resource planning provider last quarter, and the next component of our IT roadmap is progressing with the appropriate designing and planning for our full ERP migration," Tritton said. Slides from the earnings call show that the company is in the second phase of its enterprise resource planning migration.

The implementation of a new solution from Relex Solutions for improved forecasting is also underway.

This technology will help to drive Bed Bath & Beyond's overhaul of its replenishment system that will rely on new regional distribution centers. It is currently constructing a new Northeast distribution center, Tritton said.

"As part of this endeavor, we are currently finalizing an agreement with the third-party logistics partner to begin establishing our new store replenishment approach," he said.