Production
https://prod.org.br/article/doi/10.1590/0103-6513.20240103
Production
Research Article

An empirical analysis of inventory performance in Brazil commerce sector: 1996-2021

Felipe Tumenas Marques

Downloads: 0
Views: 5

Abstract

Paper aims: This study investigates inventory performance in Brazil’s commerce sector (retail, wholesale, and automotive) from 1996 to 2021. It examines how internal and macroeconomic factors influence inventory turnover, a key operational efficiency metric.

Originality: Using Annual Commerce Survey data by the Brazilian Institute of Geography and Statistics, this research offers a comprehensive analysis. A quasi-experimental approach explores a 2009 tax change, revealing how factors influence inventory performance in developing economies.

Research method: The study applies panel data econometrics with fixed and random effects models. Robustness checks include substituting inventory turnover with inventory days. A Difference-in-Differences approach is used to assess the tax reform’s impact on inventory turnover in the retail sector.

Main findings: During the period under analysis, the data reveals a general decline in inventory performance. Retail firms are primarily influenced by factors such as profit margins, GDP growth, and both consumer and industrial confidence, whereas wholesale firms exhibit greater sensitivity to interest rates and wage levels. Capital intensity plays a affected inventory performance across all sectors. Surprise had no significant effect on inventory performance, challenging previous research.

Implications for theory and practice: Findings emphasize sector-specific inventory management strategies. Macroeconomic factors impact sectors differently, suggesting that tailored strategies are essential for improving operational efficiency and policy development in emerging markets.

Keywords

Inventory, Retail, Wholesale, Econometrics

References

Ak, B. K., & Patatoukas, P. N. (2016). Customer‐base concentration and inventory efficiencies: evidence from the manufacturing sector. Production and Operations Management, 25(2), 258-272. http://doi.org/10.1111/poms.12417.

Akkina, K. R. (1983). The effects of carrying cost uncertainty and expected price changes on inventories in the United States during 1959-1979. Nebraska Journal of Economics and Business, 22(2), 49-64.

Alan, Y., Gao, G. P., & Gaur, V. (2014). Does inventory productivity predict future stock returns? A retailing industry perspective. Management Science, 60(10), 2416-2434. http://doi.org/10.1287/mnsc.2014.1897.

Baltagi, B. H., & Baltagi, B. H. (2008). Econometric analysis of panel data (Vol. 4, pp. 135-145). Chichester: John Wiley & Sons.

Barker, J. M., Hofer, C., Hoberg, K., & Eroglu, C. (2022). Supplier inventory leanness and financial performance. Journal of Operations Management, 68(4), 385-407. http://doi.org/10.1002/joom.1185.

Bechter, D. M., & Pollock, S. H. (1980). Are inventories sensitive to interest rates? Economic Review, 65, 18-27.

Blinder, A. S., Lovell, M. C., & Summers, L. H. (1981). Retail inventory behavior and business fluctuations. Brookings Papers on Economic Activity, 1981(2), 443. http://doi.org/10.2307/2534345.

Cannon, A. R. (2008). Inventory improvement and financial performance. International Journal of Production Economics, 115(2), 581-593. http://doi.org/10.1016/j.ijpe.2008.07.006.

Chen, H., Frank, M. Z., & Wu, O. Q. (2005). What actually happened to the inventories of American companies between 1981 and 2000? Management Science, 51(7), 1015-1031. http://doi.org/10.1287/mnsc.1050.0368.

Chen, H., Frank, M. Z., & Wu, O. Q. (2007). U.S. retail and wholesale inventory performance from 1981 to 2004. Manufacturing & Service Operations Management, 9(4), 430-456. http://doi.org/10.1287/msom.1060.0129.

Croissant, Y., & Millo, G. (2025). plm: linear models for panel data. Version 2.8-0. Vienna: R Foundation for Statistical Computing. Retrieved in 2025, October 5, from https://cran.r-project.org/package=plm

Eroglu, C., & Hofer, C. (2011). Lean, leaner, too lean? The inventory‐performance link revisited. Journal of Operations Management, 29(4), 356-369. http://doi.org/10.1016/j.jom.2010.05.002.

Gaur, V., Fisher, M. L., & Raman, A. (2005). An econometric analysis of inventory turnover performance in retail services. Management Science, 51(2), 181-194. http://doi.org/10.1287/mnsc.1040.0298.

Gaur, V., Kesavan, S., & Raman, A. (2014). Retail inventory: managing the canary in the Coal Mine. California Management Review, 56(2), 55-76. http://doi.org/10.1525/cmr.2014.56.2.55.

Hançerlioğulları, G., Şen, A., & Aktunç, E. A. (2016). Demand uncertainty and inventory turnover performance: An empirical analysis of the US retail industry. International Journal of Physical Distribution & Logistics Management, 46(6/7), 681-708. http://doi.org/10.1108/IJPDLM-12-2014-0303.

Hendricks, K. B., & Singhal, V. R. (2003). The effect of supply chain glitches on shareholder wealth. Journal of Operations Management, 21(5), 501-522. http://doi.org/10.1016/j.jom.2003.02.003.

Hendricks, K. B., & Singhal, V. R. (2005). Association between supply chain glitches and operating performance. Management Science, 51(5), 695-711. http://doi.org/10.1287/mnsc.1040.0353.

Hendricks, K. B., & Singhal, V. R. (2009). Demand-supply mismatches and stock market reaction: Evidence from excess inventory announcements. Manufacturing & Service Operations Management, 11(3), 509-524. http://doi.org/10.1287/msom.1080.0237.

Instituto Brasileiro de Geografia e Estatística – IBGE. (2024). Pesquisa Anual de Comércio (PAC). Rio de Janeiro. IBGE.

Irvine, F. O., & Schuh, S. (2005). Inventory investment and output volatility. International Journal of Production Economics, 93-94, 75-86. http://doi.org/10.1016/j.ijpe.2004.06.007.

Isaksson, O. H. D., & Seifert, R. W. (2014). Inventory leanness and the financial performance of firms. Production Planning and Control, 25(12), 999-1014. http://doi.org/10.1080/09537287.2013.797123.

Jola-Sanchez, A. F., & Serpa, J. C. (2021). Inventory in times of war. Management Science, 67(10), 6457-6479. http://doi.org/10.1287/mnsc.2020.3801.

Kahn, J. A. (1987). Inventories and the volatility of production. The American Economic Review, 77, 667-679.

Kahn, J. A. (1992). Why is production more volatile than sales? Theory and evidence on the stockout-avoidance motive for inventory-holding. The Quarterly Journal of Economics, 107(2), 481-510. http://doi.org/10.2307/2118479.

Kesavan, S., & Kushwaha, T. (2014). Differences in retail inventory investment behavior during macroeconomic shocks: role of service level. Production and Operations Management, 23(12), 2118-2136. http://doi.org/10.1111/poms.12048.

Kesavan, S., & Mani, V. (2013). The relationship between abnormal inventory growth and future earnings for US public retailers. Manufacturing & Service Operations Management, 15(1), 6-23. http://doi.org/10.1287/msom.1120.0389.

Kesavan, S., Gaur, V., & Raman, A. (2010). Do inventory and gross margin data improve sales forecasts for US public retailers? Management Science, 56(9), 1519-1533. http://doi.org/10.1287/mnsc.1100.1209.

Kesavan, S., Kushwaha, T., & Gaur, V. (2016). Do high and low inventory turnover retailers respond differently to demand shocks? Manufacturing & Service Operations Management, 18(2), 198-215. http://doi.org/10.1287/msom.2015.0571.

Khan, A., & Thomas, J. K. (2007). Inventories and the business cycle: an equilibrium analysis of (S, s) policies. The American Economic Review, 97(4), 1165-1188. http://doi.org/10.1257/aer.97.4.1165.

Kolias, G. D., Dimelis, S. P., & Filios, V. P. (2011). An empirical analysis of inventory turnover behavior in Greek retail sector: 2000-2005. International Journal of Production Economics, 133(1), 143-153. http://doi.org/10.1016/j.ijpe.2010.04.026.

Koschat, M. (2008). Store inventory can affect demand: empirical evidence from magazine retailing. Journal of Retailing, 84(2), 165-179. http://doi.org/10.1016/j.jretai.2008.04.003.

Larson, P. D., & Sijbrands, M. J. C. (1991). Quick response retailing in Canada and The Netherlands. International Journal of Retail & Distribution Management, 19(7), 10-17. http://doi.org/10.1108/EUM0000000002956.

Magalhães, G. F. (2010, March 1). Em 2009, redução do IPI aumentou em 21% vendas de produtos da linha branca. InfoMoney. Retrieved in 2024, September 16, from https://www.infomoney.com.br/mercados/em-2009-reducao-do-ipi-aumentou-em-21-vendas-de-produtos-da-linha-branca/

Marzolf, M. J., Miller, J. W., & Peinkofer, S. T. (2024). Retail & wholesale inventories: a literature review and path forward. Journal of Business Logistics, 45(1), e12367. http://doi.org/10.1111/jbl.12367.

Pearce, D. K., & Wisley, T. O. (1983). Sales expectations and inventory changes in retail trade. Journal of Economics and Business, 35(1), 109-121. http://doi.org/10.1016/0148-6195(83)90034-6.

R Core Team. (2023). R: a language and environment for statistical computing. Version 4.3.0. Vienna: R Foundation for Statistical Computing. Retrieved in 2025, October 5, from https://www.R-project.org/

Rajagopalan, S., & Malhotra, A. (2001). Have US manufacturing inventories really decreased? An empirical study. Manufacturing & Service Operations Management, 3(1), 14-24. http://doi.org/10.1287/msom.3.1.14.9995.

Rumyantsev, S., & Netessine, S. (2007). What can be learned from classical inventory models? A cross-industry exploratory investigation. Manufacturing & Service Operations Management, 9(4), 409-429. http://doi.org/10.1287/msom.1070.0166.

Shah, R., & Shin, H. (2007). Relationships among information technology, inventory, and profitability: an investigation of level invariance using sector level data. Journal of Operations Management, 25(4), 768-784. http://doi.org/10.1016/j.jom.2007.01.011.

Shan, J., & Zhu, K. (2013). Inventory management in China: an empirical study. Production and Operations Management, 22(2), 302-313. http://doi.org/10.1111/j.1937-5956.2012.01320.x.

Slack, N., Brandon-Jones, A., & Johnston, R. (2013). Operations management (7th ed.). London: Pearson Education.

Steinker, S., & Hoberg, K. (2013). The impact of inventory dynamics on long-term stock returns-an empirical investigation of US manufacturing companies. Journal of Operations Management, 31(5), 250-261. http://doi.org/10.1016/j.jom.2013.05.002.

Thomas, J. K., & Zhang, H. (2002). Inventory changes and future returns. Review of Accounting Studies, 7(2-3), 163-187. http://doi.org/10.1023/A:1020221918065.

Udenio, M., Hoberg, K., & Fransoo, J. C. (2018). Inventory agility upon demand shocks: empirical evidence from the financial crisis. Journal of Operations Management, 62(1), 16-43. http://doi.org/10.1016/j.jom.2018.08.001.
 


Submitted date:
10/05/2024

Accepted date:
04/10/2025

683dde77a953956b70015454 production Articles
Links & Downloads

Production

Share this page
Page Sections