Many retailers are cutting prices on excess inventory

  • Big retailers like Target, as well as luxury outlets, are making big sales.
  • This is because they have a backlog of pandemic-era products that they need to unload.
  • Now that shoppers have shifted focus, retailers need to make room for travel goods and back-to-school supplies.

A Twitter user was thrilled with the furniture and home decor sales at Target on Monday morning.

“Target a sale”, the user going through the handle @_dimelodennise job. “Studio McGee 25-30% off. My cart is full of vibes right now,” adding, “I received some bookends, a bowl/pitcher set, a round mirror, and some vases yesterday. Now , I try to find which target has the lamps I want and throw pillows for my room.”

Promoting shopping deals may seem surprising after months of rising inflation, but some retailers are announcing huge sales this summer as they struggle to adjust to changing American shopping habits. And sales could help offset some of the pain the price hike has inflicted.

It was the result of last year’s supply chain crisis response finally catching up with businesses. Merchandise on cargo ships stranded overseas a few months ago is now saturating store shelves, and retailers are having to get rid of them. St. Louis Fed Data shows that non-automotive inventory grew by nearly $100 billion between April 2021 and April 2022. That’s bad news for stores like Target, which are are looking to reduce their inventoryand good news for consumers, who are enjoying deep discounts after inflation has cost them something.

“It’s retail armageddon,” said Burt Flickinger, managing director of Strategic Resource Group, Told CBS News last week. “You have too much merchandise and too many stores chasing too few customers with too few dollars,” Flickinger said.

Retailers like Macy’s, Target and Walmart have confirmed this in recent weeks, saying they’re overloaded with products their customers bought just a few months ago, like sweatpants, TVs, video games and merchandise. household. Now that buyers’ budgets have shifted to travel and service expensesstores say they need to get rid of these excess stocks.

And these discounts also extend to high-end sellers: luxury platforms like Mr Porter and Farfetch are currently promoting many discounts in the range of 50% to 70%.

“There is clear evidence that inflation is slowing,” Dean Baker, co-founder of the Center for Economic and Policy Research, told Insider. “Many large retail outlets are complaining about excess inventory and the need for big price markdowns.”

Even luxury brands tout rare offerings

Luxury retailers generally reduce their prices less often than other sellers because their affluent clientele is seen as isolated the tightening of the economy. It was clear this year when luxury outlets like Ralph Lauren and Nordstrom avoid inflation hit chains like Walmart and Target.

But anecdotal evidence shows that even luxury goods are now being marked down. Despite a increase in the total amount spent on luxury items, outlets like SSENSE are offer hundreds of dollars off the list price. SSNENSE and Bloomingdales, for example, are both selling designer sneakers from high-end brands like Comme des Garçons for 50% off.

And even if the demand for designer watches grows up, sales are still reasonably easy to find: new Omega watches can be purchased for 20%, and a second-hand luxury watch retailer offers $300 off at all levels.

Matchesfashion, a London-based luxury clothing retailer, currently offers its own dramatic markdowns up to 60% because it struggling to make a profit after supply delays, hurt sales.

How retailers ended up overbuying

Retailers are currently suffering from what is known as the “whiplash effect,” which is a phenomenon where distorted demand for products leads to supply chain inefficiencies such as long wait times and excess inventory. .

This came after they bought too much stock in a panic over supply chain fears over the past few months. This panic blocked supply lines and caused shortages, and now businesses are stuck with products arriving – an even bigger problem as consumer demand has changed.

Target said its inventory has increased 43% of last year, Walmart said its own was up 32%, and Macy’s said it has 17% more inventory than in 2021.

And retail executives have directly linked the current glut of sales to their excess inventory. Last month, Target CEO Brian Cornell cited inflation, as well as “historic highs with inventory levels”, as he discussed dramatic markdowns on inventory. He called the current environment “a lot of us have never seen before”.

Earlier in June, Target announcement its goal to reduce inventory by offering discounts, as well as canceling existing orders from suppliers. Analysts say Target’s main discounts will be “largely discretionary items” such as TVs and appliances that consumers have shunned as inflation has risen in recent months, Reuters reported in June.

Macy’s CEO said this week that prices for overstocked items will drop soon, if they haven’t already.

“Customers are about to get amazing deals on products that were hot during the pandemic,” he said. Told Time.

Carolyn Ng Cohen, a spokeswoman for Macy’s, told Insider that the company is trying to “minimize” markdowns as much as possible while equalizing its inventory.

Walmart’s recent inventory clearing discounts have been so significant that it did not hold a specific event to compete with Amazon Prime Day this year, which it traditionally does. In fact, markdowns have been so high at Walmart stores that investment bank Oppenheimer Holdings deleted the company from its list of top picks for investors.

At any budget, it seems some consumers are ready to venture out of the inflation hole.

“Parents, if you’re able to take advantage of this huge Target toy sale, I will,” one Twitter user said. said. “I pretty much finished my Christmas shopping in 1 day. $550 worth of stuff for $200.”