Less to choose from

At Saks Fifth Avenue, the luxury retailer has slashed its inventory by about 20 percent compared with last year. Department store JCPenney is running nearly 14 percent leaner. And even discounters like Wal-Mart have decreased inventory by about 6 percent.

The cutbacks should be obvious to consumers heading into the holiday season, historically the busiest shopping period when stores are often bursting at the seams with products. This year, retailers are more willing to run low, or even out of stock, rather than face being left with millions of dollars in unwanted merchandise at season’s end. Last year, that resulted in promotions of up to 70 percent that gouged profits.

“If I had to err, I’d rather have too little inventory than too much. You might miss opportunities, but the risk is getting stuck with huge quantities of product,’’ said Steve Sadove, chief executive of Saks Fifth Avenue. “All competitors have decreased their inventories coming into the season, and we don’t think we’re going to see discounting like that again. For those hot items and fashion goods, if you don’t buy them, there’s a good chance it’s not going to be there next time.’’

After more than a year of widespread store closures and layoffs across the retail industry, merchants are increasingly opting to reduce inventory as a way to adjust to sluggish consumer spending. Stores are dropping brands, offering fewer choices (such as eliminating some colors), or simply not buying as much. But stocking a smaller selection risks chasing away customers and sales, according to retail analysts.

In a recent study by BDO Seidman, a leading accounting and consulting firm, about 40 percent of chief financial officers at leading US merchants said insufficient inventory is the biggest risk to holiday sales. But it is a step many retail executives are willing to take to avoid a repeat of last year’s disastrous results.

“There’s a shift in focus now from layoffs and store closings to inventory management at shops,’’ said Ted Vaughn, a partner in the retail and consumer products practice at BDO Seidman. “They’re trying to protect their margins by not having to discount as much and their cash flow by not investing in all this inventory if it’s not going to sell.’’

Some retailers hope their websites will offer an alternative for shoppers who find the merchandise in their stores insufficient. While most aren’t stocking more online, retailers say Web orders allow them to sell excess merchandise from stores rather than rely on discounting.

Nordstrom, an upscale department store chain, has added features to make online products more accessible, such as an option for shoppers to buy items online and pick them up in stores.

“If a customer can’t find what she’s looking for in the store, we’re able to utilize our online inventory more fully to get her the merchandise she’s looking for,’’ said Colin Johnson, a Nordstrom spokesman.

In its latest earnings report, for the three months ending Aug. 1, the company said it had reduced inventory per square foot by 12 percent, as sales declined 11 percent for that period.

Some consumers have already made the switch from outlet to Internet.

“I am doing a lot more shopping online because I just can’t find things I am looking for,’’ said Norm Blumberg of Stoughton, who favors sites such as Amazon.com and Shoebuy.com. “It is a lot easier to Google what you want and pay the small shipping fee than drive around looking for stores that don’t exist.’’

Nancy James and colleagues at her Concord insurance company have noticed that supermarket chains, including Stop & Shop, have been running out of their favorite brands more frequently and not restocking specialty items such as gluten-free products for weeks.

Stop & Shop said it launched a program to better manage inventory in 2006 and has focused on reducing prices and adjusting selection. Faith Weiner, a Stop & Shop spokeswoman, declined to provide details on inventory cuts over the past year. “These efforts have been well received, and we continue to focus on offering the right products, right assortment at a great price,’’ she said.

Merchants - even purveyors of luxury items - are also offering lower-priced items. Saks is removing some brands and expanding the selection of products at lower prices, such as Prada purses that cost less than $1,000.

Luciano Manganella, who used to own the Jasmine Sola brand and now operates the 344 chain, has completely changed his assortment to make the merchandise more affordable. His line of dresses cost $200 last year; this year, a less expensive selection averages about $39. Manganella has dropped most of his branded products, including lines from Juicy Couture and BCBG, and said the value of his inventory is down 20 percent.

He keeps fewer items in his stock room, but is ordering every couple of days instead of every two months because the cheaper goods move through the stores more quickly.

“I had been losing money from day one because of markdowns and less spending from consumers,’’ Manganella said. “The only way we could see going forward was to adjust and lower prices and stay lean.’’

Jenn Abelson can be reached at abelson@globe.com.