For the first time since 1998, stock holding levels have fallen across all product categories with double-digit reductions in nearly half the categories, according to new research.

In its new report Retail Logistics 2005, food and grocery think-tank IGD surveyed the leading food and grocery retailers and wholesalers and found that total average stock levels have been reduced to just 11.3 days compared to 12.8 in 2003.

Non-foods have seen the biggest improvement in 2004 where stock levels have fallen by nearly 36% to 12.5 days. Tesco has the lowest stockholding in this category of 11 days, as it becomes increasingly efficient with its international sourcing strategy.

Frozen food stock levels have fallen consistently since 1996 from 12 days to 7.9 days (35%). With a high proportion of products supplied by a few global manufacturers, effective collaboration has changed working practices and reduced the levels of inventory held. Sainsbury’s has the lowest stockholding of five days in this category.

Fast moving goods such as soft drinks stock levels have fallen to 9.7 days (3%), aided significantly, IGD believes, by the introduction of shelf ready packaging. Palmer & Harvey has the lowest stock holding in this category of 6.5 days.

Slow moving goods such as cleaning products have seen stock levels fall by 4% to 10.7 days. Tesco has the lowest stock holding of 8.6 days in this category.

Beers, wines and spirits is the only area where there has been minimal change, stock levels have reduced by 1% to 19.1%. Stock holdings remain the highest in this category, mainly due to the long lead times associated with international wine supply chains. Sainsbury’s has the lowest stockholding of nine days.
Three retailers have reduced their overall stock holding – Asda by 10% to 11.6 days, Booker by 16% to ten days and Iceland, by 5% to 10.5 days. 

“We are now starting to see the results of ECR working practices making a real impact on the supply chain. Having access to shared information such as stores sales data has enabled suppliers to see what is happening at the till and react to the needs of the customer. Open communication and collaborative practices such as Co-Managed Inventory have enabled retailers to actively reduce the amount of stock held in their business,” said IGD programme manager Tarun Patel.

“These sort of practices have led to the fall in total average stock holding levels to 11.3 day, which is an excellent result for the industry.  To achieve this in one category would be considered efficient, but as this represents the total performance of ambient grocery, frozen, non-foods, beers, wines and spirits, it is truly an exceptional result,” Patel added.