The stores have too many things. This means discounts are coming
Last year, major chains forfeited promotions because products were in short supply due to production bottlenecks and slowdowns at major global ports.
Stores and brands were able to sell goods at full price to consumers who had accumulated savings while staying at home during the pandemic and were eager to spend big on their homes and wardrobes.
Conditions have changed in recent months. Some stores are sitting on excess inventory of goods they ordered from manufacturers months ago in hopes that consumer spending would be searing. But demand has slowed as consumers feel pressure from the biggest annual rise in inflation since the 1980s.
“Companies have been chasing as much commodity as possible to support demand, which has now slowed,” Dana Telsey, CEO and director of research at Telsey Advisory Group, said in a note to clients on Monday. Markdowns and promotions are starting to increase, she said.
“There is excess inventory … in all areas of retail right now,” Urban Outfitters CEO Richard Hayne said Tuesday.
Urban Outfitters will increase promotions for the rest of the year and during the winter holiday shopping season, he said.
Target said it carried too many large and bulky products such as furniture, televisions and kitchen appliances last quarter and misjudged the extent of consumers’ shift to shopping for luggage, toys and home decor. .
“We didn’t anticipate the magnitude of this change,” Target CEO Brian Cornell said last week.
Target has reduced some of these larger items to make room for the most in-demand products.
And Best Buy also said it saw an increase in promotions for TVs and computers.
“Some products were even more promotional than expected at the start of the quarter and were similar to pre-pandemic levels,” CEO Corie Barry said Tuesday.
These companies buy high-end products at low prices and then resell them to buyers at a lower price than their original prices.
“The shopping environment is now better than it has been for years,” Burlington CEO Michael O’Sullivan said Thursday. “We’re seeing marks that we haven’t seen in a few years.”